Hillary has $75,000.00 to invest in a CD (Certificate of Deposit). The CD earns 4 1/2 %. How long will she have to wait until she has $95,250.00? Round to the nearest year.
Mathematics · Middle School · Tue Nov 03 2020
Answered on
Given:
Principal Amount(P): $75,000
Rate( r ): 4.5% or 0.045
Target Amount( A ) : $95,250
Determine the time it would take in years.
Solution:
Determine first the interest earned by subtracting the target amount by the principal amount.
A = I + P
I = A - P
I= 95250 -75000
I=20,250
Simple interest formula:
I = Prt
20,250 = 75000(0.045)t
20,250 = 3,375t
Divide both sides by 3,375 in order to get the value of t.
t = 6
Final Answer:
Hillary must wait 6 years.