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 $34,000​?

b. If you let your money grow for 10 years at 8 percent​, how much will you​ have?

c. How long will it take your money to grow to $34,000 if you move it into an account that pays 5 percent compounded​ annually? How long will it take your money to grow to ​$34,000 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

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