# B to quadruple case a interest rate 7 b 44 20 d lg2

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: . a. Find how much you will have accumulated in the account at the end of (1) 3 years, (2) 6 years, and (3) 9 years. b. Use your findings in part a to calculate the amount of interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9). c. Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 3-year period. LG2 4–6 Inflation and future value As part of your financial planning, you wish to purchase a new car exactly 5 years from today. The car you wish to purchase costs \$14,000 today, and your research indicates that its price will increase by 2% to 4% per year over the next 5 years. a. Estimate the price of the car at the end of 5 years if inflation is (1) 2% per year, and (2) 4% per year. b. How much more expensive will the car be if the rate of inflation is 4% rather than 2%? LG2 4–7 Future value and time You can deposit \$10,000 into an account...
View Full Document

## This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

Ask a homework question - tutors are online