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A bank offers a CD that pays a simple interest rate of 9.5 ​%. How much...

A bank offers a CD that pays a simple interest rate of 9.5 ​%. How much must you put in this CD now in order to have ​$2500 for a​ home-entertainment center in 3 years.

The present value that must be invested to get $2500 after 3 year to get an interest rate of 9.5% is?

Solutions

Expert Solution

Present value = Future value / (1 + r * t)

= $2500 / (1 + 9.5% * 3)

= $2500 / 1.285

= $1,945.5253 or $1,945.53

Present value = $1,945.53

jeff jeffy answered 2 years ago
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