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 9% interest compounded​ annually, how many years will it be before your inheritance grows to ​$33,000​?

b) If you let your money grow for 9.5 years at 9%​, 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% compounded​ annually? How long will it take your money to grow to ​$33,000 if you move it into an account that pays 13%​?

d) What does all this tell you about the relationship among interest​ rates, time, and future​ sums? Is it positive or negative?

Answer 1