You have $16,000 you want to invest for the next 32 years. You are offered an investment plan...
Question:
You have $16,000 you want to invest for the next 32 years. You are offered an investment plan that will pay you 8% per year for the next 16 years and 12% per year for the last 16 years. How much will you have at the end of the 32 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
If the investment plan pays you 12% per year for the first 16 years and 8% per year for the next 16 years, how much will you have at the end of the 32 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The Power of Compounding:
An investment earns a compounding return when return accrues not only on the initial investment, but also on the accrued returns over time. With a compound return, the total value of the investment increases exponentially over time.
Answer and Explanation: 1
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View this answerWe can use the following formula to compute the future value of an asset with current value {eq}V_0 {/eq}, period return {eq}r{/eq}, after ...
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How to Calculate Future Value: Formula & Example
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Chapter 5 / Lesson 16
40K
Understand the definition of future value and the future value formula. Explore some examples that show how to calculate the future value of an investment.
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