Question

suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1912. it is now 2020. note: for all requirements, do not round intermediate calculations. round your answer to 2 decimal places. if your great-grandfather invested $1,000 in 1912, how much would that investment be worth today?

Answer 1

The investments today’s worth is $203001.61.

We have to calculate the future value of the investments. So we can use the formula,

A=P (1+r/100)ⁿ

Where, A stands for future value, P stands for Present value, R stands for Interest rate, n stands for Time period.

Interest rate (r) = 5%= 0.05 and Time period is from 1912 to 2020 so, it is equals to 108 years. (2020-1912year)

On putting the values in the above formula we get,

A = 1000× (1+ 5/100)^108

=1000*203.001612

=$203001.61

The worth of a current asset at some point in the future based on an estimated rate of growth is known as future value (FV). The future value calculation enables investors to forecast, with varying degrees of accuracy, the amount of profit that can be generated by various investments.

Investors and financial planners use the future value to estimate how much an investment made today will be worth in the future. The future value equation is used to assess various possibilities since the growth produced by holding a given amount in cash will probably differ from that produced by investing that same amount in equities.

To learn more about future value, refer this link.

brainly.com/question/24703884

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