Problema Solution
A bank offers a CD that pays a simple interest rate of
10.0%.How much must you put in this CD now in order to have
$4,000 for a home-entertainment center in
3 years.
Answer provided by our tutors
P = the amount you put in CD
r = 0.10 or 1%
t = 3 years
A = $4,000 the future value in t years
A = P + Prt
A = P(1 + rt)
P(1 + rt) = A
........
click here to see the equation solved for P
........
P = $3,076.92
You must put $3,076.92 on this CD.