SOLUTION: Graduation is 3 years away and you want to have $850 available for a trip. If your bank is offering a 3-year CD (certificate of deposit) paying 2.8% simple interest, how much do yo

Question 1059216: Graduation is 3 years away and you want to have $850 available for a trip. If your bank is offering a 3-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?
Answer by jorel555(1290) (Show Source): You can put this solution on YOUR website!
The bank offers 2.8% simple interest for 3 years. This amounts to 3 x .028, which equals 8.4% over the years. Let your initial deposit be n. Then:
n(1+.084)=850
1.084n=850
n=$784.13 needs to be your initial deposit. ☺☺☺☺
Simple interest does NOT compound over time; so the bank only pays 2.8% interest per year on the initial deposit. Since the CD is for a 3 year period, the total interest earned is 3 x 2.8%, which is 8.4%. Let n be your initial deposit. Then:
n(100%+8.4%)=850
1.084n=850
n=$784.13 ad your initial deposit. Again. ☺☺☺☺
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