1. Future value If you deposit $11,000 in a bank account that pays 11% interest
ID: 2621525 • Letter: 1
Question
1. Future value
If you deposit $11,000 in a bank account that pays 11% interest annually, how much would be in your account after 5 years? Round your answer to the nearest cent.
$
2. Finding the required interest rate
Your parents will retire in 21 years. They currently have $350,000, and they think they will need $1,500,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
%
3.Inflation
Due to a recession, expected inflation this year is only 2.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 2.75%. Assume that expectations theory holds and the real risk-free rate is r* = 2.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 2.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places.
%
Can you please put the answer's in Bold letters thank you
Explanation / Answer
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Current Funds available = $ 350,000
Funds required by the time of Retirement = $ 1,500,000
Time Period available = 21 Years
Required Rate of Interest
= (Time Period? Funds required by the time of Retirement
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