Answer to Question #92754 in Financial Math for Greta Sina

Question

2. Set the Payment Frequency and Compounding Frequency both to 1. Enter a payment amount of $1000 and an age of 30. Enter interest rates of 0.02, 0.04, 0.06, 0.08, and 0.10. Note the amount that each investment grows to.
3. Does the investment amount increase by the same amount each time? Explain.
No because you are changing the interest rate which means you will get more every time you increase your interest rate, but because the interest rate is different it will be increasing at a different rate each time.
4. Calculate the ratio between successive investment amounts. What pattern do you notice?

Answer 1

The answer to your question is provided in the image: