Question

a bank offers a cd that pays a simple interest rate of 4.5. how much must you put in this cd now in order to have 2500 for a home entertainment center in 4 years.

Answer 1

Answer:

Principat amount to be invested = P= $ 2,118.64

Equation:
P = A / (1 + rt)
r = R/100 ( where R is the simple interest rate)
r = 4.5%/100 = 0.045 per year
A= amount required after 4 years = $2500
t= time period = 4 years
putting the values in equation

P = 2500 / ( 1 + (0.045 × 4)) = 2118.6440677966
P = $ 2,118.64

The principal investment to get a total amount of $ 2,500 in 4 years is $ 2,118.64.