To determine the number of years it would take for money to reach a certain amount, we need to know the type of interest of the problem. As a general rule, when it is not stated clearly in the problem, we assume that it is a simple interest problem since it is the basic type of interest. We use the formula for the future value for simple interest rate. It is expressed as:
F = P (1 + i )^n where F is the future value, P is the present value, i is the interest rate, and n is the number of years
We calculate as follows:
5500 = 400 (1 + .08 )^n
55/4 = (1 + .08)^n
n = 34.06 years
