Ahmad deposits $2500 in a savings account that pays simple interest at 2% per year. He makes no deposits or withdrawals. After how many years will the total amount in the account be $2800?
Need a hint?
Work out the interest needed first, then find how much interest the account earns in one year on the original $2500.
Worked answer
- Interest needed = $2800 - $2500 = $300.
- Interest earned each year = 2% of $2500 = $50 (the principal stays at $2500).
- Number of years = $300 ÷ $50 = 6.
Answer: 6 years
The mistake this question tests
Habit
Percentage of a new total
Taking 2% of the new total of $2800 gives $56 a year, which is not the interest the account actually earns on the original deposit.
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