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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...
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