you want to put $2,500 in a simple interest account. it has a 4% annual interest rate. how long must you…

you want to put $2,500 in a simple interest account. it has a 4% annual interest rate. how long must you invest that money to earn $500 in interest? 1.25 years 2.5 years 5 years 20 years

you want to put $2,500 in a simple interest account. it has a 4% annual interest rate. how long must you invest that money to earn $500 in interest? 1.25 years 2.5 years 5 years 20 years

Answer

Explanation:

Step1: Recall simple - interest formula

The simple - interest formula is $I = Prt$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. We are given that $P=$2500$, $I = $500$, and $r=4%=0.04$.

Step2: Rearrange the formula to solve for $t$

From $I = Prt$, we can solve for $t$ by dividing both sides of the equation by $Pr$. So, $t=\frac{I}{Pr}$.

Step3: Substitute the given values into the formula for $t$

Substitute $I = 500$, $P = 2500$, and $r=0.04$ into the formula $t=\frac{I}{Pr}$. $t=\frac{500}{2500\times0.04}$ First, calculate $2500\times0.04 = 100$. Then, $t=\frac{500}{100}=5$.

Answer:

5 years