Question

You deposit $3000 in an account that

earns simple interet at an annual rate of
5%. How long must you leave the money
in the account to earn $500 in interest?

Answer 1

3 ¹/₃ years

Explanation:

Simple Interest Formula

I = Prt

where:

• I = Total interest.
• P = Principal amount.
• r = Annual interest rate (in decimal form).
• t = Time (in years).

Given:

• I = $500
• P = $3,000
• r = 5% = 0.05

Substitute the given values into the formula and solve for t:

`\sf \implies 500=3000 * 0.05 * t`

`\sf \implies 500=150t`

`\sf \implies t=(500)/(150)`

`\implies \sf t=3(1)/(3)`

Therefore, the money must be left in the account for 3 ¹/₃ years for the account to earn $500 interest.