Question

The 1990s was a period of rapid economic growth and a robust stock market that yielded an average annual return of 18.6%! If you invested $1,000 at the beginning of the decade, and you reinvested the interest you earned every year, calculate the value of your investment at the end of the decade.

Answer 1

Answer:

$5,506.14

Explanation:

In calculating the value of your investment at the end of the decade, we will use the formula below

A = P [1 + (R / 100)]^n

A = Total investment amount at the end of the decade, P = Principal amount invested, R = Annual interest rate in percentage, and N = Years

P = 1,000 , R = 18.6%, N = 10

A = $1,000 *(1 + 18.6%)^10

A = $1,000 *(1+0.186)^10

A = 1$,000*(1.186)^10

A = $1,000*5.506135

A = $5506.135

A = $5,506.14

Hence, the value of the investment at the end of the decade will be $5,506.14