A five-year, compound-interest GIC purchased for $1,000 earns 6% compounded annually.
a) How much interest will the GIC earn in the fifth year?
b) If the rate of inflation during the five-year term is 2.5% per year, what will be the percent increase in the purchasing power of the invested funds over the entire five years?

Question

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The Answer of A five-year, compound-interest GIC purchased for $1,000 earns 6% compounded annually.
a) How much interest will the GIC earn in the fifth year?
b) If the rate of inflation during the five-year term is 2.5% per year, what will be the percent increase in the purchasing power of the invested funds over the entire five years?

A Five-Year, Compound-Interest GIC Purchased for $1,000 Earns 6% Compounded