If ₦225.00 yields ₦27.00 in x years simple interest at the rate of 4% per annum, find x
Answer Details
To solve this problem, we use the formula for simple interest:
I = P*r*t
Where:
I = Interest earned
P = Principal amount
r = Rate of interest per year (as a decimal)
t = Time period in years
In this case, we are given:
P = ₦225.00 (the principal amount)
I = ₦27.00 (the interest earned)
r = 4% = 0.04 (the rate of interest per year)
Substituting these values into the formula, we get:
27 = 225 * 0.04 * t
Simplifying the equation, we have:
27 = 9t
Dividing both sides by 9, we get:
t = 3
Therefore, the answer is 3 years.
Explanation: The interest earned on the principal amount of ₦225.00 is ₦27.00. This means that for every year, the interest earned is 27/225 = 0.12 or 12% of the principal amount. We know that the rate of interest per year is 4%, which is much lower than the interest earned per year of 12%. This means that it will take more than 1 year for the interest earned to reach the rate of interest. In fact, it takes 3 years for the interest earned to reach the rate of interest of 4%, which is why the answer is 3.