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11 December, 01:33

Kremena's bank account earns 4.5% simple interest per year. How much must she deposit in the account today if she wants it to be worth $1,250 in 3 years? Round your answer to the nearest dollar.

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Answers (2)
  1. 11 December, 01:41
    0
    1095$ should be invested today.

    Step-by-step explanation:

    The formula of present value will be applied here:

    Present Value = Future Value / (1 + interest rate) ^Years

    Present Value = 1250 / (1.045) ^3
  2. 11 December, 01:49
    0
    Answer: $1101 must be deposited into the account.

    Step-by-step explanation:

    Let x represent the amount that must be deposited.

    The formula for determining simple interest is expressed as

    I = PRT/100

    Where

    I represents the interest after T years.

    P represents the principal or initial amount deposited.

    T represents the amount of time for which the money is left in the account in years.

    R represents the interest rate.

    From the information given,

    P = $x

    T = 3 years

    R = 4.5%

    I = 1250 - x

    Therefore,

    1250 - x = (x * 4.5 * 3) / 100

    1250 - x = 0.135x

    x + 0.135x = 1250

    1.135x = 1250

    x = 1250/1.135

    x = 1101 to the nearest dollar
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