Question

Graduation is 4 years away and you want to have $500 available for a trip. If your bank is offering a 4-year CD (certificate of deposit) paying 2.8% simple interest, how much do you need to put in this CD to have the money for your trip?

can someone please explain I am so lost with this

Answer 1

`~~~~~~ \textit{Simple Interest Earned Amount} \\\\ A=P(1+rt)\qquad \begin{cases} A=\textit{accumulated amount}\dotfill & \$ 500\\ P=\textit{original amount deposited}\\ r=rate\to 2.8\%\to (2.8)/(100)\dotfill &0.028\\ t=years\dotfill &4 \end{cases} \\\\\\ 500 = P[1+(0.028)(4)] \implies 500=1.112P\implies \cfrac{500}{1.112}=P\implies 449.64\approx P`