Question

Suppose you deposit $2,000 in savings account that pays interest at an annual rate of 4%. If no money is added or withdrawn, determine how many years it will take for the account to contain $2,500.
A) 3 years
B) 4 years
C) 5 years
D) 6 years

Answer 1

Using I = PRT

$2500 - $2000 = $2000 × 0.04 × t

$500 = 80t

t = $500 ÷ 80
t = 6.25 years

so the answer is 6