Reference no: EM131744305

Question: In the show Futurama, main character Fry is frozen in the year 2000 and awakens one thousand years later, in the year 3000. At the moment he is frozen, Fry's savings account had a balance of merely $0.93. Upon awakening a thousand years later, he finds his account has a value of $4.3 billion. Fry's savings account earns annual interest at 2.25%.

Part a: Assume interest is compounded annually. Is the show correct? Has Fry's $0.93 turned into $4.3 billion?

Part b: How much would Fry have in his bank account in the year 3000 if his interest had compounded semiannually? What if it were compounded monthly?

Part c: Assume the inflation rate is 3% during the years 2000 - 3000. What is the discounted present value (in the year 2000) of Fry's bank account balance in the year 3000?

Hints: Use the future value you calculated in part a (based on annual compounding). Assume inflation discount compounds annually.