Question

You are hoping to buy a house in the future and recently received an inheritance of ​$24,000. 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 percent interest compounded​ annually, how many years will it be before your inheritance grows to ​$​30,000?

b. If you let your money grow for 10.5 years at 8 percent​, how much will you​ have?

c. How long will it take your money to grow to ​$.0,000 if you move it into an account that pays 3 percent compounded​ annually? How long will it take your money to grow to ​$30,000 if you move it into an account that pays 13 percent​?

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

Answer 1

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