(20 pts) A woman decides to put a lump sum of money into a certified deposit...

Question

Question

(20 pts) A woman decides to put a lump sum of money into a certified deposit for 3 years earning a monthly interest rate of 0.75%. She wants to have $2,800 to go on a cruise through the Mediterranean. How much money does she need to put into the certified deposit?

b) (10 pts) What is the amount of money deposited initially?

Answer 1

Answer #1

total months = 3 * 12 = 36 months

i = 0.75% per month

F = P *(1+i)^t

P = 2800 / (1+0.0075)^36

= 2800 / (1.0075)^36

= 2800 / 1.308645

= 2139.62

CFD

2800 i = 0.75% per month 2140 deposited for 36 months

Answer 2

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