Question

1. (Compound Interest) A little Babie Duckie plans to buy a $225 rotisserie oven to roast itself in 5
years when it grows up. The Duckie finds a bank that pays quarterly compounded interest.
(a) If the bank is willing to offer an interest rate of 7.5%, how much money does the Duckie have to
invest now in order to afford the rotisserie oven 5 years later?
(b) Assume the bank only offers quarterly compounded interest. If the Duckie only has $140 now,
what annual interest rate must it get in order to accumulate enough money to place the purchase 5
years later?

Answer 1

for A.