Question

You are scheduled to receive $16,000 in two years. when you receive it, you will invest it for eight more years at 9.25 percent per year. how much will you have in ten years?

Answer 1

I will have $32 470.69 in 10 yr.

I am not investing until 2 yr from now so, in 10 yr time, I will have invested for only 8 yr.

The formula for the future value (FV) of my investment is

FV = C(1 + r)^n

where C = my initial cash

r = the interest rate

n = the number of years

FV = $16 000(1.0925)^8 = $32 470.69