Simple Interest: Number of Years?

Thread Starter

zulfi100

Joined Jun 7, 2012
656
Hi,
I want to solve following question:

An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment?
Simple Interest formula is:

V=P(1+rt) Let p =10 & t=1

V= 10(1+12.5) = 135


In just one year the interest obtained is more than the Principal value. Some body please guide me what is my mistake. What I understand is that, I have to find the number of years in which the interest obtained & added (with previous years’ interest ) becomes equal to the Principal.
 

The Electrician

Joined Oct 9, 2007
2,815
Hi,
I want to solve following question:

An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment?
Simple Interest formula is:

V=P(1+rt) Let p =10 & t=1

V= 10(1+12.5) = 135


In just one year the interest obtained is more than the Principal value. Some body please guide me what is my mistake. What I understand is that, I have to find the number of years in which the interest obtained & added (with previous years’ interest ) becomes equal to the Principal.
r is not 12.5; it's .125

Give that a try.
 
Hi,
I want to solve following question:

An investment is made at 12.5% annual simple interest. Find the number of years it will take for the cumulative value of the interest to equal the original investment?
Simple Interest formula is:

V=P(1+rt) Let p =10 & t=1

V= 10(1+12.5) = 135


In just one year the interest obtained is more than the Principal value. Some body please guide me what is my mistake. What I understand is that, I have to find the number of years in which the interest obtained & added (with previous years’ interest ) becomes equal to the Principal.
Zulfi, this is a little disappointing because we just went through a relatively long thread helping you with a compound interest homework problem. In that case, I stressed to you how important it was to give thought to the definitions in the formula that you use. We came to an agreement on this matter and yet just a few days later, you are back with the same approach.

I plead with you... define the variables in the formula and then add your entries and look at them and think about them. Here you have an error and it is good that you realized that you have an error but rather than learning from the experience of the compound interest example, you are back to - I have an error - somebody guide me.

Somebody will come by and point out the error and correct it for you (as has happened here) and eventually you will get the right answer. But, you will be no closer to understanding why you made the error. I fear that I have also done that in the past and reading this thread is convincing me that @WBahn makes a very good point when he stresses that if you don't try to understand what you are doing you will continue to be forced to get someone else to answer it for you, over and over again.

I'm sorry if this is too harsh, but the idea behind me insisting that you understand the definitions of the variables before you attempt to solve the equations was so that you would gain some understanding about how the equation is working. Your final response in the compound interest thread fooled me into thinking that you had gained some insight, but your approach here shows otherwise and that is a little disappointing.
 

WBahn

Joined Mar 31, 2012
26,398
In the compound interest thread you had 8% annual interest rate and had no problem dividing that in half and getting 0.04.

But here you have 12.5% annual interest rate and when you divide it by 1 you get 12.5.

Do you see the elephant in the room?

You don't appear to understand percentages at their most basic level, so in two different threads in as many days you use them completely differently, further underscoring the common belief that you are doing little more than guessing over and over and over until you either happen to guess right or someone shows you the answer. But in neither case do you then make a real effort to actually learn anything, you just immediately go on to another problem in which you reset your knowledge base back to square one.
 
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