Question

When I was considering what to do with my $10,000 Lottery winnings, my broker suggested I invest half of it in gold, the value of which was growing by 12% per year, and the other half in certificates of deposit (CDs), which were yielding 2% per year, compounded every 6 months. Assuming that these rates are sustained, how much will my investment be worth in 5 years?

Answer 1

In 5 years, the investment will be worth 5000(1 + 0.12)^5 + 5000(1 + 0.02/2)^(5 * 2) = 5000(1.12)^5 + 5000(1.01)^10 = 8811.71 + 5523.11 = $14,334.82