Question

You are hoping to buy a house in the future and recently received an inheritance of $16,000. You intend to use your inheritance as a down payment on your house.

a. If you put your inheritance in an account that earns 7 percent interest compounded​ annually, how many years will it be before your inheritance grows to $33,000?

b. If you let your money grow for 10.25 years at 7 percent. how much will you have?

c. How long will it take your money to grow to $33,000 if you move it into an account that pays 3 percent compounded​ annually? How long will it take your money to grow to $33,000 if you move it into an account that pays 12 percent?

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

Answer 1