To earn 500 dollars in interest at 4% simple interest, you must leave the money in the account for 6.25 years.

Quick Scoop

We use the simple interest formula:

I=P×r×tI=P\times r\times tI=P×r×t

Where:

  • III = interest earned
  • P=2000P=2000P=2000 (the principal)
  • r=0.04r=0.04r=0.04 (4% annual rate as a decimal)
  • ttt = time in years

Plug in the values:

500=2000×0.04×t500=2000\times 0.04\times t500=2000×0.04×t

500=80t500=80t500=80t

t=50080=6.25t=\frac{500}{80}=6.25t=80500​=6.25

So you must leave the money in the account for 6.25 years , which is 6 years and 3 months.