The money in dollars that must be put in this cd in order to have $5,000 in 3 years is $4,081.63
The formula for simple interest and procedure we will use to solve this exercise is:
A = P {1 + [(R/100) * T]}
Where:
- P = principal
- R = rate of interest in % per annum
- T = time
- A = amount
Information about the problem:
- P = ?
- R = 7.5%
- T = 3 years
- A = $5,000
Applying the simple interest formula and isolating the principal (P), we get:
A = P {1 + [(R/100) * T]}
$5,000 = P {1+[(7.5/100) * 3]}
$5,000 = P [1+(0.075*3)]
$5,000 = P (1+0.225)
$5,000 = P (1.225)
P = $5,000/ 1.225
P = $4,081.63
<h3>What is simple interest?</h3>
It is the operation in which we calculate the profit produced by a capital loaned at a given percentage.
Learn more about simple interest at: brainly.com/question/20690803
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