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2. 3. 4. 5. You are considering a savings bond that will pay $300 in 10 years. If the interest rate is 3%, what should
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You are considering a savings bond that will pay $300 in 10 years. If the interest rate is 3%, what should you pay today for the bond? You should pay \$ for the bond. (Round to the nearest cent.) Calculate the future value of $8,000 in a. 4 years at an interest rate of 5% per year. b. 8 years at an interest rate of 5% per year. c. 4 years at an interest rate of 10% per year. d. Why is the amount of interest earned in part a less than half the amount of interest earned in part b? What is the present value of $7,000 received: a. 10 years from today when the interest rate is 10% per year? b. 20 years from today when the interest rate is 8% per year? c. 5 years from today when the interest rate is 4% per year? Your grandfather put some money into an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. The account currently has $5,157 in it and pays an interest rate of 11%. a. How much money would be in the account if you left the money there until your 25th birthday? b. What if you left the money until your 65th birthday? c. How much money did your grandfather originally put into the account? Suppose you invest $1,800 in an account paying 6% interest per year. a. What is the balance in the account after 3 years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 20 years? How much of this balance corresponds to "interest on interest
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