simple interest formula

[Questions]

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Can someone please help me solve this?

In what time will a sum of interest be two times the original money at 12% per year at simple interest?

 

[redchesus]

If I remember correctly, simple interest is just:

I = Prt (where P is the principal, r is the rate, and t is the time)


2P = Prt

t = 2P/Pr = 2/r = 2/0.12 ≈ 2/(1/8) ≈ 16 years? (a little bit more, because 0.12 is less than 1/8 so you're dividing by a smaller number)

 

[Streetwolf]

No it is:

P = P(o)(1+r)^t

2P = P(1+r)^t
2 = (1.12)^t
ln(2) = t * ln(1.12)
t = ln(2) / ln(1.12)
t = 6.12 years

 

[redchesus]

No it is:

P = P(o)(1+r)^t

2P = P(1+r)^t
2 = (1.12)^t
ln(2) = t * ln(1.12)
t = ln(2) / ln(1.12)
t = 6.12 years

Umm... I'll have to double check, but that looks like compound interest compounded annually. And P in that equation is the final amount which includes interest AND principal, whereas the question only asks for the sum of the interest.

EDIT: Did a Wikipedia search to double check: http://en.wikipedia.org/wiki/Simple_interest#Simple_interest