Question

Carin opened a money market account with a

deposit of $3,000. This account earns 2% simple
interest annually. How many years will it take for
her $3,000 deposit to earn $420 in interest, assum-
ing she does not withdraw any of the money?

Answer 1

7

Explanation:

For simple interest,

I = prt

where I = interest,

p = principal (amount deposited)

r = annual rate of interest

t = time in years

We have r = 2% = 0.02

p = $3,000

I = $420

We need to find t

I = prt

420 = 3000 * 0.02 * t

420 = 60t

t = 420/60

t = 7

Answer: 7 years