Final answer:
To have $3000 after two years in a CD with a simple interest rate of 5%, an initial deposit of $2727.27 is needed. This is calculated using the simple interest formula with rearrangement to solve for the principal.
Step-by-step explanation:
To have $3000 in two years with a simple interest rate of 5%, you must calculate the initial deposit using the formula for simple interest, which is I = PRT (Interest equals Principal times Rate times Time). Since you want the final amount (A) to be $3000, and the interest is the amount over the initial deposit, you can use A = P + I or A = P(1 + RT).
In your case, you are solving for P (the principal) so you need to rearrange the formula to P = A / (1 + RT). Substituting the values, you get P = $3000 / (1 + 0.05 × 2). Calculating this gives P = $3000 / 1.10, which results in P = $2727.27 when rounded to the nearest cent. Therefore, the initial deposit should be $2727.27 to have $3000 in two years at a 5% simple interest rate.