Chapter 8, Problem 1RE

To determine

The time with the help of simple interest formula.

Answer to Problem 1RE

The time is $\underset{\_}{2\text{ years}}$.

Explanation of Solution

Formula used:

Simple Interest Formula: $I=PRT$, where P is the principal, I is the interest, R is the rate and T is the time.

Procedure used:

“To evaluate a formula:

Step 1: Write the formula.

Step 2: Rewrite the formula, substituting known values for variables of the formula.

Step 3: Solve the equation from Step 2 for the missing variable.

Step 4: Interpret the solution within the context of the formula.”

Calculation:

Given that, $I=\$387.50,P=\$1,550\text{ and }R=12.5\%$.

The rate $R=12.5\%$ should be expressed as a decimal equivalent, $12.5\%=0.125$.

Substitute the given values in the Simple Interest Formula $I=PRT$.

$\begin{array}{l}I=PRT\\ 387.50=\left(1,550\right)\left(0.125\right)\left(T\right)\\ 387.50=193.75T\left(\text{Multiply}\right)\\ \frac{387.50}{193.75}=\frac{193.75T}{193.75}\left(\text{Divide}\right)\\ 2=T\left(\text{Interpret solution}\right)\end{array}$

That is, $T=2$.

Thus, the time is $\underset{\_}{2\text{ years}}$.