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30 August, 12:40

You are scheduled to receive $7,500 in two years. When you receive it, you will invest it at 4.5 percent per year. How much will your investment be worth ten years from now

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  1. 30 August, 13:18
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    The investment will worth $10666

    Explanation:

    You will receive $7500 from now after two years and value of investment after ten years from now. It indicates that initial investment will remain for 8 years in actual in our hand. Therefore, using the formula FV = PV x (1+r) ^n.

    PV = $7500

    Rate = 4.5%

    n = 8

    FV = PV (1 + r) ^ n

    FV = $7500 (1 + 0.045) ^ 8

    FV = $10666
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