Question
1.Derek can deposit $221.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month.
1.Derek can deposit $221.00 per month for the next 10 years into an account at Bank A. The first deposit will be made next month. Bank A pays 14.00% and compounds interest monthly. Derek can deposit $2,510.00 per year for the next 10 years into an account at Bank B. The first deposit will be made next year. Bank B compounds interest annually. What rate must Bank B pay for Derek to have the same amount in both accounts after 10 years?
2.Assume the real rate of interest is 3.00% and the inflation rate is 2.00%. What is the value today of receiving 12,878.00 in 11.00 years?
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