# You have $19,750 you want to invest for the next 22 years You are offered an investment plan that...

## Question:

You have $19,750 you want to invest for the next 22 years You are offered an investment plan that will pay you 9 percent per year for the next 11 years and 13 percent per year for the last 11 years.

1: How much will you have at the end of the 22 years?

2: If the investment plan pays you 13 percent per year for the first 11 years and 9 percent per year for the next 11 years, how much will you have at the end of the 22 years?

## Investment Value and Changing Interest Rates:

The value of an investment depends on the interest rate, which it earns. If the interest rate increases, the value of the investment will increase at a faster rate. If the interest rate declines, the investment value will increase at a slower rate.

## Answer and Explanation: 1

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Let:

- FV = future value in 22 years
- PV = present value today = $19,750
- r = first interest rate = 9%
- q = second interest rate = 13%
- n = first...

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Chapter 5 / Lesson 16Understand 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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