Question
A depositor placed $10,000 into a CD (certificate of deposit, time deposit savings account) at his local bank. The account pays annual compound interest. a.
A depositor placed $10,000 into a CD (certificate of deposit, time deposit savings account) at his local bank. The account pays annual compound interest. a. At 6.00% annual interest, calculate the amount of money the account in the account after the following number of years: 1 year, 5 years, 15 years. b. At 8.00% annual interest, calculate the amount of money in the account after the following number of years: 1 year, 5 years, 15 years. c. Lets say our depositor decided to keep the money under the mattress instead. What is the interest rate (or growth rate) of the money in that case? How much will he have after 1, 5, and 15 years? d. What conclusions can you draw about the relationship of time, interest rates and future sums from your calculations?
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