Problema Solution

Suppose that you plan on investing into a account paying simple interest. The formula for simple interest is I = Prt, where I is the interest earned on a investment of P dollars, at the given rate r, over t years. If the banker tells you that the time for your investment is determine by the following t = (I)/r, would they be correct?

Answer provided by our tutors

I = Prt

by solving the above equation for t we get:

t = I/(Pr) is different from t = I/r

Thus the banker is wrong.