Question

Kremena's bank account earns 4.5% simple interest. How much must she deposit in the account today if she wants it to be worth $1,250 in 3 years? Give your answer in dollars to the nearest dollar. Do not include the dollar symbol or

Answer 1

Answer: Kremena needs to deposit $1,101 today to earn a total of $1,250 in 3 years at 4.5% simple interest rate

Explanation:

Interest = Principal (P) × Rate (R) × Time (T)

Amount = Principal (P) + Interest

Amount = P + PRT

Amount = P (1 + RT)

1250 = P (1 + (0.045 × 3))

1250 = P (1 + 0.135)

1250 = P (1.135)

Principal = 1250 ÷ 1.135

Principal = approx. 1101