Question

You deposit $800 in an account that earns simple interest at an annual rate of 5%.

How long must you leave the money in the account to earn $100 in interest?

Answer 1

Answer: 2.5 years

Explanation:

The formula to calculate the simple interest is given by :-

`I=Prt`, where P is the principal amount , r is the rate of interest ( in decimal) and t is time ( in years).

Given : P= $800 ; r= 5% =0.05 and I=$100

Then , we have

`100=800*0.05t\\\\\Rightarrow\ t=(100)/(800*0.05)=2.5`

Hence, you must leave the money in the account for 2.5 years to earn $100 in interest.