The Business of Life

/in /by

​(Related to The Business of​ Life: Saving for Your First​ House) ​ (Future value)  You are hoping to buy a house in the future and recently received an inheritance of ​$22000

22,000. You intend to use your inheritance as a down payment on your house.

a.  If you put your inheritance in an account that earns 8

8percent interest compounded​ annually, how many years will it be before your inheritance grows to ​$31000

31,000​?

b.  If you let your money grow for 9.75

9.75 years at 8

8 percent​, how much will you​ have?

c.  How long will it take your money to grow to ​$3000

31,000 if you move it into an account that pays 3

3 percent compounded​ annually? How long will it take your money to grow to ​$31000

31,000 if you move it into an account that pays 13

13 percent​?

d.  What does all this tell you about the relationship among interest​ rates, time, and future​ sums?

 
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