Ask Question
28 September, 14:14

You have $12,500 you want to invest for the next 30 years. You are offered an investment plan that will pay you 7 percent per year for the next 10 years and 9.5 percent per year for the last 20 years. How much will you have at the end of the 45 years

+5
Answers (1)
  1. 28 September, 17:10
    0
    Future value = $151,018.51

    Explanation:

    Future value of money measures how much a present amount of money will be in the future at a given interest rate.

    The interest gained on money shows the time value of money. One dollar today is less than one dollar in one year's time

    The formula for future value is

    Future value = Present value * (1 + rate) ^time

    As we have two periods in this case (10 years and 20 years)

    Future value = Present value * { (1 + rate1) ^time1} * { (1 + rate2) ^time2}

    Future value = 12,500 * { (1 + 0.07) ^10} * { (1 + 0.095) ^20}

    Future value = $151,018.51
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “You have $12,500 you want to invest for the next 30 years. You are offered an investment plan that will pay you 7 percent per year for the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers