How long (in years) will it take an initial balance of $1000 to reach $3500 at 2.5% simple interest?

Question

How long (in years) will it take an initial balance of $1000 to reach $3500 at 2.5% simple interest?

Answer 1

Simple Interest = (Principal * Number of Years * Rate of Interest) / 100

Simple interest in our case = $3500 - $1000 = $2500

Thus, $2500 = ($1000 * N * 2.5) / 100

Thus, N = $2500 * 100 / ($1000 * 2.5)

N = 100 years

Answer 2

If it's simple interest, the interest is only applied to the initial principal. Each year you get 2.5% of $1000 added to the total. The equation for your balance becomes y = 1000 + 1000*(0.025)*t where t is the number of years, so you can use this to solve.

For comparison: if it was compounded interest, you would get 2.5% of the updated total at the end of each year your equation for the balance would be y = 1000 * (0.025)^t