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(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8000 in a savings account paying...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8000 in a savings account paying annual compound interest of 5 percent.

a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3, 7, and 17 year(s).

b.Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9percent.

Rework part (a) using 7percent and 9 percent.

c.What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did?

a.After placing $8,000 in a savings account paying annual compound interest of 5 percent, the amount of money that will accumulate if Leslie leaves the money in the bank for 3

year(s) is $___. (Round to the nearest cent.)

If she leaves the money in the bank for 7 years, the amount of money that will accumulate is $____. (Round to the nearest cent.)

If she leaves the money in the bank for 17 years, the amount of money that will accumulate is

$____. (Round to the nearest cent.)

b. If Leslie moves her money into an account that pays 7 percent compounded annually for 3 year(s), the amount of money that will accumulate is

$___ . (Round to the nearest cent.)

If Leslie moves her money into an account that pays 7percent compounded annually for 7 years, the amount of money that will accumulate is

$____. (Round to the nearest cent.)

If Leslie moves her money into an account that pays 7 percent compounded annually for 17 years, the amount of money that will accumulate is

$___. (Round to the nearest cent.)

If Leslie moves her money into an account that pays 9 percent compounded annually for 3 year(s), the amount of money that will accumulate is

$_____. (Round to the nearest cent.)

If Leslie moves her money into an account that pays 9 percent compounded annually for 7 years, the amount of money that will accumulate is

$____. (Round to the nearest cent.)

If Leslie moves her money into an account that pays 9 percent compounded annually for 17 years, the amount of money that will accumulate is

$____. (Round to the nearest cent.)

c.What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did?

There is a positive/negative relationship between the interest rate used to compound a present sum and the future value of that sum. There is a positive/negative relationship between the number of years for which the compounding continues and the future value of that sum.

Expert Solution

jeff jeffy answered 2 months ago

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