Bob invests 100 dollars in a fund that yileds 15% simple

Hi All,

We're told that Bob invests 100 dollars in the middle of January into a fund that yields 15% simple interest calculated monthly. We're asked for the first month in which the fund will have more than $200 total. This question involves the Simple Interest Formula, although you will likely find it useful to 'brute force' the Arithmetic:

Simple Interest = (Principle)(1 + (R)(T)) where R is the interest rate that T is the number of periods.

Here, the Principle = $100, R = .15 and T is the variable that we are solving for. If you solve for T, you'll have...

(100)(1.15T) = 200
1.15T = 2
T = 2/1.15

This is not a particularly 'nice' calculation, so you might find it easier to count '$15 increases' instead. Since we're calculating Simple Interest, each month will generate $15 in interest - and the total in the account will increase by $15 each month: $100 in January, $115 in February, $130 in March, etc..... $145, $160, $175, $190, $205 in August.

Final Answer: C

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Rich