SOLUTION: A bank offers a CD that pays a simple interest rate of 7.5%. How much must you put in this CD now in order to have $4 comma 000 for a home-entertainment center in 3 years.
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Question 1206375: A bank offers a CD that pays a simple interest rate of 7.5%. How much must you put in this CD now in order to have $4 comma 000 for a home-entertainment center in 3 years. Answer by ikleyn(52769) (Show Source):
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A bank offers a CD that pays a simple interest rate of 7.5%. How much must you put
in this CD now in order to have $4 comma 000 for a home-entertainment center in 3 years.
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The formula for the future value of a simple interest deposit is
FV = .
Here FV = $4000 (given); X is the unknown value of the one-time amount deposited today;
r is the annual rate (0.075, given); t is the time in years (3 years, given).
From this formula, X = = = 3265.31 (rounded).
ANSWER. $3265.31 should be deposited today.
