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Today, an investment you made three years ago has matured and is now worth $2500. It was a three-year deposit that bore an interest rate
Today, an investment you made three years ago has matured and is now worth $2500. It was a three-year deposit that bore an interest rate of 9 percent per year, compounded monthly. You knew at the time that you were taking a risk in making such an investment because interest rates vary over time and you locked in" 9 percent for three years. Looking back over the past three years, interest rates for similar one-year investments did indeed vary. The interest rates were 7 percent in the first year, 9 percent in the second year, and 12 percent in the third, all of which compound monthly. Answer parts (a) and (b) below. a. Determine the value of the investment for the three-year period using the fixed interest rate and the varying interest rate. Note that (Round final answers to the nearest whole number as needed. Round all intermediate values to six decimal places as needed.) Today, an investment you made three years ago has matured and is now worth $2500. It was a three-year deposit that bore an interest rate of 9 percent per year, compounded monthly. You knew at the time that you were taking a risk in making such an investment because interest rates vary over time and you locked in" 9 percent for three years. Looking back over the past three years, interest rates for similar one-year investments did indeed vary. The interest rates were 7 percent in the first year, 9 percent in the second year, and 12 percent in the third, all of which compound monthly. Answer parts (a) and (b) below. a. Determine the value of the investment for the three-year period using the fixed interest rate and the varying interest rate. Note that (Round final answers to the nearest whole number as needed. Round all intermediate values to six decimal places as needed.)
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