We deposit $ 2000 in an account earning simple interest at an annual rate of 4 %. We need to find out how long does the money need to stay in the account in order for us to earn $ 500 in interest. First, let's recall the Simple Interest Formula.
I=Prt
In the formula I is the interest, P is the principal amount, r is the annual interest rate, and t is the time in years. To find the duration t, we need to solve the formula for t.
Let's now recall the values for both the accrued and annual interest, as well as the deposit. We will write the annual rate as a decimal.
I&= 500
r&= 4 %= 0.04
P&= 2000
We can substitute these values into the rewritten formula and then evaluate.
