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You deposit $2000 in an account that earns simple interest at an annual rate of 4%. How long must you leave the money in the account to earn $500 in interest?

User Starboy
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Hope this helped

User Vinit Dhatrak
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To earn $500 in interest at a 4% annual rate, you need to leave $2000 in the account for approximately 6.25 years.

The formula for simple interest is given by:


\[ I = P * r * t \]

Where:

- I is the interest earned,

- P is the principal amount (initial deposit),

- r is the annual interest rate (expressed as a decimal), and

- t is the time the money is invested or borrowed in years.

In this case, you want to find t, so rearrange the formula to solve for t:


\[ t = (I)/(P * r) \]

Given that P = $2000, r = 0.04 (4% as a decimal), and I = $500, plug these values into the formula:


\[ t = (500)/(2000 * 0.04) \]

Calculate the result to find out how long you must leave the money in the account to earn $500 in interest.


\[ t = (500)/(2000 * 0.04) \]\[ t = (500)/(80) \]\[ t = 6.25 \]

Therefore, you must leave the money in the account for approximately 6.25 years to earn $500 in interest at a simple annual rate of 4%.

User Thore
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