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Assume you are bequeathed $500 by a long-lost cousin. You decide that, for the next year, you will put all that money in the bank until you decide what to do with it. The bank is currently paying an interest rate of 4%.
a. At the year's end you will have $______
b. At the year's end your savings will have increased by $________

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facundobuzzetti

Answer:

Results are below.

Explanation:

Giving the following information:

Initial investment (PV)= $500

Number of periods (n)= 1 year

Interest rate (i)= 4% = 0.04

To calculate the future value after one year, we need to use the following formula:

FV= PV*(1+i)^n

FV= 500*(1.04^1)

FV= $520

The savings increased by $20.