You invest a single amount of $20,000 for 6 years at 7 percent. At the end of 6 years, you take the proceeds and invest them for 8 years at 10 percent. How much will you have after 14 years?
Future Value of an Investment:
The value of money depreciates with time. So, the worth of $1 today is more than that at a later date. Future value of any investment signifies the worth of that payment at the later date compounded at the given rate of return.
Answer and Explanation: 1
First, let us summarize the given:
- Invested amount = $20,000
- Interest rate for first 6 years, r1 = 7% = 0.07
- Interest rate for next 8 years, r2 = 10%...
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fromChapter 5 / Lesson 16
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.