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 \( \$500\)?
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 (year). Just plug in I = 150, P = 350, and r = 0.08, and solve for t: 150 = 350(0.08)t =28t. Therefore t= 150/28 or approximately 5 years 4 months.