If an investor earns $120 as interest on a stock worth $800 at a simple interest

If an investor earns $120 as interest on a stock worth $800 at a simple interest rate of 5% per annum, how long did the investment last?

If an investor earns $120 as interest on a stock worth $800 at a simple interest rate of 5% per annum, how long did the investment last?

Step 1: Identify the given values. The interest earned is $120, the principal (initial investment) is $800, and the interest rate is 5% per annum.
Step 2: Convert the interest rate from a percentage to a decimal. 5% as a decimal is 0.05.
Step 3: Use the formula for time in simple interest, which is Time = Interest / (Principal * Rate).
Step 4: Substitute the values into the formula: Time = 120 / (800 * 0.05).
Step 5: Calculate the denominator: 800 * 0.05 = 40.
Step 6: Now divide the interest by the result from Step 5: Time = 120 / 40.
Step 7: Calculate the final result: 120 divided by 40 equals 3.
Step 8: Conclude that the investment lasted for 3 years.

Simple Interest Calculation – Understanding how to calculate time using the formula for simple interest, which is Time = Interest / (Principal * Rate).