Question
(Related to The Business ofLife: Saving for Your FirstHouse) (Future value) You are hoping to buy a house in the future and recently received an
(Related to The Business ofLife: Saving for Your FirstHouse) (Future value)You are hoping to buy a house in the future and recently received an inheritance of $22000
22,000. 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
8 percent interest compoundedannually, how many years will it be before your inheritance grows to $31000
31,000?
b.If you let your money grow for 9.75
9.75 years at 8
8 percent, how much will youhave?
c.How long will it take your money to grow to $3000
31,000 if you move it into an account that pays 3
3 percent compoundedannually? How long will it take your money to grow to $31000
31,000 if you move it into an account that pays 13
13 percent?
d.What does all this tell you about the relationship among interestrates, time, and futuresums?
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