Question

Sam opened a money-market account that pays 3% simple interest. He started the account with $7,000 and made no further deposits. When he closed the account, he had earned $840 in interest. How long did he keep his account open?

Answer 1

A 4 years
B 6 years
C 5 years

Answer 2

Simple interest means that he received 3% per year on his original investment.
We can lay this out in an equation.\[840 = years * 7000 * 0.03\]
Therefore
\[years = 840 \div (7000*0.03) = 4\]
So A is correct.