If an investor possesses a portfolio heavily concentrated in Certificates of Deposit, a financial advisor would most likely sugg
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Answer:
Step 1: Calculate the future value for $100,000 for 25 years at 7.5% interest rate as follows:
Here, the investment was made 5 years ago and the money HM will have 20 years from now will total add to 25 years.
Future Value =
Future Value =
Future Value = $ 100,000 x 6.0983396
Future Value = $609,833.961
Step 2: Calculate the future value for additional $1,500 a year from today at the beginning of each year for 20 years at 7.5% annual interest rate as follows:
Future Value = $69,828 .80
Step 3: Calculate the total money HM will have at the end of 20 years as follows:
Total money = Future value of $100,000 + Future value of yearly investment of $1,500
Total money = $609,833.96 + $69,828.80
Total money = $679,662.76
Therefore. the total money HM will have at the end of 20 years is $679,662.761