We have to find how long must someone invest $2,500 in a simple interest to earn $500 at at a 4% annual interest rate. Formula for the simple interest is: I = P * r * t, where: I = $500, P = $2,500, r = 0.04 and t stays for the number of the years. 500 = 2,500 * 0.04 * t; 500 = 100 * t; t = 500 : 100; t = 5. Answer: 5 years.
