# MATH FOR LIBERAL ARTS

posted by CARMEN

Maria just inherited \$10,000. Her bank has a savings account that pays 4.2% interest per year. Some of her friends recommended a new mutual fund, which has been in business for three years. During its first year, the fund went up in value by 12%; during the second year, it went down by 20%; and during its third year, it went up by 15%. Maria is attracted by the mutual fund's potential for relatively high earnings but concerned by the possibility of actually losing some of her inheritance. The bank's rate is low, but it is insured by the federal government. Find the expected value of her investment after three years if she invests in the mutual fund. (Assume that the fund's past behavior predicts its future behavior. Round the answer to two decimal places.)
EV = \$????

Use decision theory to find the best investment.
The bank's savings account is the better investment.
The new mutual fund is the better investment.
The bank's savings account and new mutual fund are equal investments.

## Similar Questions

A. Joe won a lottery jackpot that will pay him \$12,000 each year for the next ten years. If the market interest rates are currently 12%, how much does the lottery have to invest today to pay out this prize to Joe over the next ten …
2. ### math need help with this

If on the first of January a savings account has a balance of \$3200 what amount will be in this account after three years if the bank gives 6% per year interest compounded quarterly?
3. ### math

Eric deposted \$32,000 in a savings account to save for his children's college education. The bank pays 8% tax-deferred interest per year compounded quarterly. How much will his account be worth at the end of 18 years?
4. ### personal finance

After a protracted legal case, Joe won a settlement that will pay him \$11,000 each year at the end of the year for the next ten years. If the market interest rates are currently 5%, exactly how much should the court invest today, assuming …
5. ### Precalculus

NEED HELP ASAP PLEASE!! A savings account starts with \$600 and pays 5% interest per year, compounded four times per year. a) A function that models the amount in dollars in the bank account after m years is A(m)=____________?
6. ### Personal Finance

Mary just deposited \$33,000 in an account paying 7% interest. She plans to leave the money in this account for eight years. How much will she have in the account at the end of the seventh year?
7. ### essential Mathematics

if on the first of january a savings account has a balance of \$3,200, what amount will be there in this account after three years if the bank gives 6% per year interest compounded quarterly?
8. ### personal finance

A.After a protracted legal case, Joe won a settlement that will pay him \$11,000 each year at the end of the year for the next ten years. If the market interest rates are currently 5%, exactly how much should the court invest today, …
9. ### math 141

Maria just inherited \$10,000. Her bank has a savings account that pays 4.1% interest per year. Some of her friends recommended a new mutual fund, which has been in business for three years. During its first year, the fund went up in …
10. ### math

Guys please i need your help i am not getting the answer over the following questions. 1) Maria banked sh. 95,000 in her bank account. If the bank gives a simple interest of 17% per year, how much will she get after 3 years?

More Similar Questions