The Business of Life
(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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