How long does it take for a sum of $120 000 to earn $ 900 simple interest at an interest rate of 3% p.a.?
Question
How long does it take for a sum of 900 simple interest at an interest rate of 3% p.a.?
Solution
To solve this problem, we can use the formula for simple interest which is:
I = PRT
where: I = Interest P = Principal amount (the initial amount of money) R = Rate of interest T = Time period
We are asked to find the time period (T), so we can rearrange the formula to solve for T:
T = I / (PR)
Given in the problem: I = 120,000 R = 3% per annum = 0.03 (in decimal form)
Substituting these values into the formula gives:
T = 900 / (120,000 * 0.03)
Calculating this gives:
T = 0.25 years
So, it would take 0.25 years (or 3 months) for a sum of 900 in simple interest at an annual interest rate of 3%.
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