Question

A company wants to save for a new piece of equipment that will cost 17,500. They have 15,000 to invest today in an account that earns 4.75% annual simple interest. How long must they invest the money in order to purchase the new equipment? Round to the tenth

Answer 1

The additional amount of $ needed is $17,500-$15,000, or $2,500.  This is the necessary increase to the $15,000 principal.

So this question boils down to how long it will take for the original $15,000 to earn $2,500 at 4.75% annual simple interest.

We thus must solve the following for n, the # of years:

i = p r t

$2,500 = $15,000 (0.0475) n

Solving for n (the number of years), n = $2,500 / [$15,000*0.0475]

Please finish this arithmetic.  Note that n is measured in years, so include "years" as part of your final answer.