Question

Raul inherited $3,300.00 from his grandmother. He wants to use the money to take his family on a vacation in 18 months. He found a Certificate of Deposit (CD) that is paying 2.875% annual simple interest. How much, to the nearest penny, will he have if he uses this investment? Round to the nearest cent, if needed.

Value $ _____

Answer 1

To calculate the value of Raul's investment, you can use the formula: V = P(1 + rt), where V is the final value, P is the principal amount, r is the interest rate, and t is the time. Plugging in the values, Raul will have approximately $3,430.62 if he uses this investment.

Step-by-step explanation:

To calculate the value of the investment, we can use the formula:

V = P(1 + rt)

Where:

• V is the final value of the investment
• P is the principal amount (initial investment)
• r is the interest rate
• t is the time in years

In this case, Raul inherited $3,300.00, so that's his initial investment (P). The interest rate (r) is 2.875% or 0.02875, and the time (t) is 18 months, which is equal to 1.5 years.

Plugging these values into the formula, we have:

V = $3,300.00(1 + 0.02875 x 1.5)

Solving this equation, we find that the value of the investment will be approximately $3,430.62 to the nearest cent.