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?

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Solution

Find the duration:
Given that the total amount $P = $ 2, 500$
Interest rate $R = 4 %$
Interest amount $I = $ 500$
Apply the formula to calculate time:
The formula is $t = \frac{I}{P R}$ . Where, $I, P, R, and t$ are the interest amount, total amount, interest rate, and time.
Substitute the values $P = $ 2, 500$ , $R = 4 %$ and $I = $ 500$ in the formula $t = \frac{I}{P R}$ :
$\begin{array}{rcl} t & = & \frac{I}{P R} \\ = & \frac{500}{2500 \times 4 %} [c o n v e r t t o d e c i m a l = \frac{4}{100} \Rightarrow 0.04] \\ = & \frac{500}{2500 \times 0.04} \\ = & \frac{5}{25 \times 0.04} \\ = & \frac{1}{5 \times 0.04} [0.04 \times 5 = 0.2] \\ = & \frac{1}{0.2} \\ = & 5 \end{array}$
Hence, the money should be invested for $5$ years to earn $$ 500$ interest.

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