1.) Ernie invested $5000 in an account for 3 years at 3.6% p.a. interest compounded quarterly. Inflation over the period averaged 2% per year. a. Calculate the value of the investment after 3 years. b. Find the real value of the investment by indexing it for inflation.

1.) Ernie invested $5000 in an account for 3 years at 3.6% p.a. interest compounded quarterly. Inflation over the period averaged 2% per year.

a. Calculate the value of the investment after 3 years.

b. Find the real value of the investment by indexing it for inflation.

 

2.) Gino invested 20 000 Euros in an account for 4 years at 4.2% p.a. interest compounded monthly. Inflation over the period averaged 3.4% per year.

a. Find the value of Gino’s investment after 4 years.

b. Find the real value of the investment

3.) Brooke invested $4000 in an account that pays 3% p.a. interest compounded half-yearly for 6 years.

a. Calculate the final value of the investment

b. How much interest did Brooke earn?

c. Given that inflation averaged 3.2% per year over the investment period, find the real value of the investment?

d. Discuss the effectiveness of the investment once inflation has been considered. 

(deals with sequences and series)

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