Question 1

Solve the problem.
-Suppose that the federal debt increases at an annual rate of 3% per year. Use the compound interest formula to determine the size of the debt in 20 years. Assume that the current size of the debt is $17
Trillion.

Accepted Answer

The compound interest formula is A = P(1 + r/n)^(nt). Here, P = $17 trillion, r = 0.03, n = 1, and t = 20. Plugging in these values, A = 17(1 + 0.03/1)^(1*20) = 17(1.03)^20 ≈ $30.7 trillion.

Question 2

Calculate the balance under the given assumptions.
-Find the savings plan balance after 4 years with an APR of 2% and monthly payments of $593.

Accepted Answer

The balance is calculated using the future value of an annuity formula. With monthly payments of $593, an APR of 2% (0.02/12 monthly rate), and 48 months (4 years), the future value is approximately $29,607.87.

Quiz 4: Managing Money

Solve the problem. -Suppose that the federal debt increases at an annual rate of 3% per year. Use the compound interest formula to determine the size of the debt in 20 years. Assume that the current size of the debt is $17 Trillion.

Calculate the balance under the given assumptions. -Find the savings plan balance after 4 years with an APR of 2% and monthly payments of $593.