Problem:

Stanford Simmons, who recently sold his Porsche, placed $10,000 in a savings account paying annual compound interest of 6%.

Required:

Question 1: Calculate the amount of money that will have accrued if he leaves the money in the bank for 1, 5, and 15 years.

Question 2: If he moves his money into an account that pays 8% or one that pays 10%, rework part (a) using these new interest rates.

Question 3: What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you have completed in this problem?

Note: Explain all steps comprehensively.