Question

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.

Answer 1

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

Answer 2

Answer:

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