You deposit $400 today in an accont years? paying 3% per year, what would be the

Question

You deposit $400 today in an accont years? paying 3% per year, what would be the balance in your account af A) $316 B) $507 C) $452 D) $635 ich of the following statements is THUE? prices nse by 5% and your salary increases by 3%, you will experience alo s of purchasing eur Lenders want to protect their purchasing power reward from being wiped out by lower ineae ou can always earn a high rate of return by purchasing zero-coupon bonds at a premiur e can find the nominal interest rate by subtracting the default and maturity premiums the real rate and inflation.

Explanation / Answer

Amount after 8 years= 400*1.038 = 506.71 = $507(approximately).

1st option is correct since rise in prices is more than rise in salary and hence less purchasing power.

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