Ellie wants to give her granddaughter a present of $500 saved in a bank account. If Ellie puts $350 in the account which earns an 8% annual interest rate, how long must she wait before the account is worth $500?
5 years 4 months.
7 years 2 months.
6 years 8 months.
8 years 7 months.
Detailed Explanation
The interest amount is $150, which is the difference between the desired amount and what Ellie originally deposits.
You can use the interest formula: I = Prt, where I interest, P is principal, r is rate, and t is time.
Just plug in I = 150, P = 350, and r = 0.08, and solve for t: 150 = 350(0.08)t = 28t = 150t ÷ 28 = 5.36 years, or approximately 5 years 4 months.
Take more free practice tests for other ASVAB topics with our ASVAB prep now!