Mr. Ho deposited $120 000 in a bank and after x months, he received a total amount of $132 000. If the bank offered him a simple interest rate of 4% p.a., find the value of x.
Question
Mr. Ho deposited 132 000. If the bank offered him a simple interest rate of 4% p.a., find the value of x.
Solution
To solve this problem, we need to use the formula for simple interest which is I = PRT, where I is the interest, P is the principal amount, R is the rate of interest, and T is the time.
In this case, the total amount Mr. Ho received was 120,000. So, the interest he earned is 120,000 = $12,000.
The rate of interest is 4% per annum, which is 0.04 when expressed as a decimal.
We can now substitute these values into the formula and solve for T (time in years):
120,000 * 0.04 * T
To isolate T, we divide both sides of the equation by $120,000 * 0.04:
T = 120,000 * 0.04) = 2.5 years
However, the problem asks for the time in months, not years. Since there are 12 months in a year, we multiply 2.5 by 12 to get the answer:
x = 2.5 * 12 = 30 months.
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