Micheal wants his $3,200 to grow to $4,500 in 3 years. He has a saving account paying simple interest on savings. What rate of interest would help him achieve his goal?I am confused as to what formula to use and would you use the banker's rule?
If the interest is simple, than it means that it is calculated on the initial deposit, regardless of the number of periods passed.
so, if the initial investment is I, interest rate is r, and the number of periods is N, then the total interest paid will be:
So, if Michael wants his initial investment I to grow to certain sum S, over N periods, the following must be true:
In your problem, I=3200; S=4500; N=3, solve for r, multiply result by 100%, this will be the rate which will help him achieve his goal.