Assume that when your great-grandmother was 25years old,

Chapter 2, Problem 5

(choose chapter or problem)

Assume that when your great-grandmother was 25years old, she received an engagement ring from herhusband-to-be. He paid $50 for the ring containing asingle, high-quality diamond. When she passed away atthe age of 90, the ring went to your grandmother, whokept it for 60 years and then gave it to your mother.After 30 years of keeping the ring in a safe place, shegave it to you on your 24th birthday. Today is your 48thbirthday and you have just discovered the ring in a deskdrawer, forgotten for all these years. If this high-gradediamond has been now appraised as a collectors gradestone, which has appreciated in value at an average rateof 4% per year, every year, since it was first purchased,you wonder what the ring might be valued at today. Team ExercisesFor each situation described, do the following using a fivepersonteam.(a) Determine the annual compound interest or inflationrate and discuss the differences in these rates from onesituation to another.(b) First, each member of the team should make an estimate(a guess) of the beginning and ending amounts of moneyinvolved for each situation. Each team member shouldnow calculate the two amounts for one selected situation.Between team members, discuss the accuracy of theirfirst estimates compared to the actual amounts calculated.