Given:
Principal (P)= $1,000
Rate of interest (R)= 4% = 0.04
Simple interest (I)= $100
To find:
The time for which she deposits $1000 into a savings account at 4% simple interest.
Solution:
The formula for simple interest is
[tex]I=P\times R\times T[/tex]
On substituting P=1000, R=0.04 and I=100 in the above formula, we get
[tex]100=1000\times 0.04\times T[/tex]
[tex]100=40T[/tex]
Divide both sides by 40.
[tex]\dfrac{100}{40}=T[/tex]
[tex]2.5=T[/tex]
Therefore, the required time is 2.5 years.
