Money in the savings account for 5 years

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Samuel Cunard has $1,000 (non-income) he wants to save to start the Halifax Steamboat Company. For questions a to c, assume no inflation.

1a. If he puts it into a savings account in which he earns 5% per year, how much will he earn if he keeps the money in the savings account for 5 years.

1b. If the annual tax rate is 40%, how much would he earn?

1c. How long would you have to keep the money in the account to obtain $1,500 assuming a 5% nominal return and no tax? How about if there is a 40% tax?

1d. How would your answers to a) and b) change if in ation was 3%?

Reference no: EM131808400

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