Question

Assume you just deposited $1,000 into a bank CD account with one year until maturity. The interest rate on your deposit is 8% 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

Answer 1

amount after 1 year = $1080

Step-by-step explanation:

given data

deposited = $1,000

interest rate = 8% = 0.08

inflation rate = 4%

solution

we get here amount after one year with 8% of interest rate will become

amount after 1 year = deposited ×
`( 1 + rate )^(time)` ................1

put here value

amount after 1 year = $1000 × ( 1 + 0.08)

amount after 1 year = $1080