Question 4 of 20
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$K$
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 $$ 3000$ for a graduation trip in 5 years?

You must put $$ ◻$ in this $C D$ now in order to have $$ 3000$ for a graduation trip in 5 years.
(Round up to the nearest cent.)
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Final Answer: You must put $2666.67$ in this CD now in order to have $3000 for a graduation trip in 5 years.

Steps

Step 1 ：Use the formula for simple interest: $A = P (1 + r t)$

Step 2 ：Rearrange the formula to solve for $P$ : $P = \frac{A}{1 + r t}$

Step 3 ：Substitute the given values: $A = 3000$ , $r = 0.025$ , $t = 5$

Step 4 ：Calculate the initial investment: $P = \frac{3000}{1 + (0.025) (5)}$

Step 5 ：Calculate the result: $P = \frac{3000}{1.125}$

Step 6 ：Find the initial investment: $P = 2666.6666666666665$

Step 7 ：Round up to the nearest cent: $P = 2666.67$

Step 8 ：Final Answer: You must put $2666.67$ in this CD now in order to have $3000 for a graduation trip in 5 years.