Question 42

Points: 1

A principal amount of $5000 is invested at an annual interest rate of 4%. How many years will it take to earn a simple interest of $600?

A.

2.5 years

B.

3 years

C.

3.5 years

D.

4 years

To solve this problem, we will use the formula for simple interest:

\[
I = P \cdot r \cdot t
\]

Where:
- $I$ is the interest earned,
- $P$ is the principal amount,
- $r$ is the annual interest rate (in decimal form),
- $t$ is the time in years.

We are given:
- $P = 5000$,
- $r = 4\% = 0.04$,
- $I = 600$.

We need to solve for $t$ (the number of years).

Substitute the values into the simple interest formula:

\[
600 = 5000 \cdot 0.04 \cdot t
\]

Now solve for $t$:

\[
600 = 200 \cdot t
\]

\[
t = \frac{600}{200} = 3
\]

Thus, it will take **3 years** to earn a simple interest of $600.

The correct answer is **B. 3 years**.

Would you like more details or have any questions?

Here are 5 related questions:
1. What is the difference between simple interest and compound interest?
2. How does the interest rate affect the time required to earn a specific interest?
3. What would be the simple interest if the principal were doubled?
4. How does increasing the principal impact the total interest earned?
5. How would the time change if the interest rate were 5% instead of 4%?

**Tip:** Always convert percentage rates to decimal form (e.g., 4% = 0.04) when using them in formulas.

A principal amount of $5000 is invested at an annual interest rate of 4%. How many years will it take to earn a simple interest of $600?
A. 2.5 years
B. 3 years
C. 3.5 years
D. 4 years

Solve how many years it will take to earn $600 in simple interest on a $5000 principal at a 4% annual interest rate. This problem uses the simple interest formula and is suitable for students in Grades 7-9.

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