You are hoping to buy a house in the future and recently received an inheritance

Question

You are hoping to buy a house in the future and recently received an inheritance of dollar 18,000. You intend to use your inheritance as a down payment on your house. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to dollar 35,000? If you let your money grow for 10.5 years at 8 percent, how much will you have? How long will it take your money to grow to dollar 35,000 if you move it into an account that pays 5 percent compounded annually? How long will it take your money to grow to dollar 35,000 if you move it into an account that pays 12 percent? What does all this tell you about the relationship among interest rates, time, and future sums? If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will it be before your inheritance grows to dollar 35,000? years (Round to one decimal place.) If you let your money grow for 10.5 years at 8 percent, how much will you have? dollar (Round to the nearest cent.) How long will it take your money to grow to dollar 35,000 if you move it into an account that pays 5 percent compounded annually? years (Round to one decimal place.) How long will it take your money to grow to dollar 35,000 if you move it into an account that pays 12 percent? years (Round to one decimal place.) What does all this tell you about the relationship among interest rates, time, and future sums? There is a relationship between both the interest rate used to compound a present sum and the number of years for which the compounding continues and

Explanation / Answer

Ans) 1. It Will take time of 8.583 years to grow 35000 at end of 9 year the amount will be 35,982.08

2.Fv = 18000(1.08)10.5= 40385.17

3.13.63Yeras

3.a.5.87 Years

4.

S.No Interest Rate Time to Reach Future Values 1 Increses Dcreases 2 Decrease Increase

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