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Find the future value of the account

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Question - According to the Federal Reserve, from 1971 until 2014, the U.S. benchmark interest rate averaged 6.05%. Source: Federal Reserve.

a) Suppose $1000 is invested for 1 year in a CD earning 6.05% interest, compounded monthly. Find the future value of the account.

b) In March of 1980, the benchmark interest rate reached a high of 20%. Suppose the $1000 from part (a) was invested in a 1-year CD earning 20% interest, compounded monthly. Find the future value of the account.

c) In December of 2009, the benchmark interest rate reached a low of 0.25%. Suppose the $1000 from part (a) was invested in a 1-year CD earning 0.25% interest, compounded monthly. Find the future value of the account.

d) Discuss how changes in interest rates over the past years have affected the savings and the purchasing power of average Americans.

Reference no: EM133188893

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