Assume you are saving $1,000 by depositing into a bank CD account with one year until maturity. The interest rate on your deposit is 10% and inflation is expected to be 4% over the next year

a. How much money will you have in your bank account at the end of one year?

b. What is the real interest rate you expect to earn on your deposit over the next year?

c. If you are saving for a gaming computer that currently sells for $1,090, will you have enough money from the savings to buy it next year?

Question

07-03-2022
Business

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Assume you are saving $1,000 by depositing into a bank CD account with one year until maturity. The interest rate on your deposit is 10% and inflation is expected to be 4% over the next year

a. How much money will you have in your bank account at the end of one year?

b. What is the real interest rate you expect to earn on your deposit over the next year?

c. If you are saving for a gaming computer that currently sells for $1,090, will you have enough money from the savings to buy it next year?

Sagot :

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