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14 October, 09:20

Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1914. It is now 2019. a. If your great grandfather invested $1,000 in 1914, how much would that investment be worth today?

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  1. 14 October, 09:25
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    FV = $273381.67

    Explanation:

    Giving the following information we need to find the value of the investment in present day

    I=1000

    i=0.05

    n=115

    The general formula to calculate the value of an investment for cases like this is:

    FV = I*[ (1+i) ^n]

    FV = 1000 * (1,05^115) = $273381.67
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