SOLUTION: A bank offers a CD that pays a simple interest rate of ​2.5%. How much must you put in this CD now in order to have ​$4,000 for a​ home-entertainment center in 4 years. Th

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Question 1176675: A bank offers a CD that pays a simple interest rate of ​2.5%. How much must you put in this CD now in order to have ​$4,000 for a​ home-entertainment center in 4 years.
The present value that must be invested to get ​$4,000 after 4 years at an interest rate of ​2.5% is ​$__.​(Round up to the nearest​ cent.)
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
simple interest is 2.5% per year.

the simple interest formula is:

f = p + p * r * t.

f is the future value
i is the interest
p is th principal
r is the interest rate per time period.
t is the number of time periods.

in that formula:

f = 4000
p = what you want find.
r is equal to 2.5% per year = .025 per year.
t is equal to 4 years.

the formula becomes:

4000 = p + p * .025 * 4

factor out the p to get:

4000 = p * (1 + .025 * 4)

simplify to get:

4000 = p * 1.10

solve for p to get :

p = 4000 / 1.10 = 3636.363636.....

in fraction form, p = 3636 + 4/11.