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

Question

You are hoping to buy a house in the future and recently recieved an inheritance of $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 9 percent interest compounded annually, how many years will it be before you inheritance grows to $33,000.

b. If you let your money grow for 9.5 years at 9 percent, how much will you have?

c. How long wil it take your money to grow to $33,000 if you move it to an account that pays 4 percent compounded annually? How long will it take your money to grow to $33,000 if you move it to an account that pays 11 percent?

d. What does this tell you about the relationship among interest rates, time, and future sums?

Explanation / Answer

Amount = Principal

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