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)