A man plans to take a vacation in 4 years He wants to buy a

A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1500 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1900 for the trip? Assume that the interest on the loan is computed using simple interest.

Solution

Simple Interest =( Principlal x rate x time)/100

Amount after 4 yrs = $1900

|Intial deposit = $ 1500

Interest = $ 400

So, 400 = 1500x rate x 4/100

rate = 6.67 % annual interst rate