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31 July, 18:14

Sam opened a money-market account that pays 2% simple interest. He started the account with $7,000 and made no further deposits. When he closed the account, he had earned $280 in interest. How long did he keep his account open?

A. 2 years

B. 5 years

C. 3 years

D. 4 years

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Answers (1)
  1. 31 July, 20:42
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    The formula for simple interest =

    I = PRT

    P = initial capital = $7000

    R = rate = 0.02 in this case

    T = time = our variable we are solving for

    Thus substitute the parts into the equation we get

    280 = 7000*0.02*T

    Solving for T we get A or 2 years
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