A bank offers a CD that pays a simple interest rate of 1.5​%. How much must you put in this CD now in order to have ​$7000 for a graduation trip in 4 ​years?


To determine how much you need to deposit now, we can use the formula for simple interest:

\[
A = P(1 + rt)
\]

Where:
- $A$ is the final amount (the goal is $7000),
- $P$ is the principal (the amount to be deposited now),
- $r$ is the interest rate (1.5% or 0.015 in decimal),
- $t$ is the time in years (4 years).

We need to solve for $P$, so we rearrange the formula:

\[
P = \frac{A}{1 + rt}
\]

Now substitute the given values:

\[
P = \frac{7000}{1 + (0.015)(4)}
\]

Let me calculate that for you.You must deposit approximately **$6603.77** in the CD now in order to have $7000 for your graduation trip in 4 years at a simple interest rate of 1.5%.

Would you like more details or have any questions?

Here are 5 related questions you might find helpful:
1. How does compound interest differ from simple interest?
2. What would the deposit amount be if the interest rate were higher, say 2%?
3. How can I calculate the interest earned after 4 years with the given rate?
4. What happens if I withdraw money before the maturity date on a simple interest CD?
5. How does time impact the total interest earned on a CD?

**Tip:** Always check if your bank compounds interest, as this can significantly affect your savings growth!

A bank offers a CD that pays a simple interest rate of 1.5%. How much must you put in this CD now in order to have $7000 for a graduation trip in 4 years?

Find out how much you need to deposit in a CD now to reach $7000 in 4 years at a simple interest rate of 1.5%. Learn to apply the simple interest formula A = P(1 + rt) and solve for P in this practical financial problem. Suitable for high school students in Grades 9-12.

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