Please help!!!

Lauren invests $6500 in some antique furniture with the idea of selling it in 3 years time.

a)if the furniture appreciates by 4.5% p.a., how much will her investment be worth in 3 years time?

b) if inflation averages 3.6% p.a. over the 3 years, and a local bank offers interest rates of 4.2% p.a. compound interest, calculated montly, discuss the wisdom of Lauren's investment. (back up your statements with workings)


cheers for the help!!

Quote:

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Originally Posted by slanno

Lauren invests $6500 in some antique furniture with the idea of selling it in 3 years time.

a)if the furniture appreciates by 4.5% p.a., how much will her investment be worth in 3 years time?

b) if inflation averages 3.6% p.a. over the 3 years, and a local bank offers interest rates of 4.2% p.a. compound interest, calculated montly, discuss the wisdom of Lauren's investment. (back up your statements with workings)


cheers for the help!!

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a)
First year: 6500 * 104.5% = $6792.50
Second year: 6792.50 * 104.5% = $7098.16
Third year: $7098.16 * 104.5% = $7417.58

b)
With the bank that Lauren invested at, she would earn $7371.21 over the 3 years. Alongside the inflation rate, the value would have been $7240.14. Lauren has been better off by $131.07.