An investment has been growing at a fixed annual rate of 20% since it was first made; no portion of the investment has been withdrawn, and all interest has been reinvested. How much is the investment now worth?

Question

Rylan Valencia

Business

5 March, 11:40

An investment has been growing at a fixed annual rate of 20% since it was first made; no portion of the investment has been withdrawn, and all interest has been reinvested. How much is the investment now worth?

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Answers (1)

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Yahir Barber · Answer 1

The correct option is 2

Explanation:

Let us assume the current value of the investment be x

And the annual growth factor of the investment is 1.2

1. The investment value has increased or risen by 44% since it was first made

It is known that the combined growth factor of the investment is 1.44 and no information is stated regarding the actual ($) values. Therefore, the unique value could not be computed.

So, this statement lacks information and insufficient to solve for x.

2. 1 year ago, the withdrawn money worth is $600 and at present the worth of the investment would be 12% less than the actual worth.

1 year ago, the value of the investment was x / 1.2. So, the equation could be set up regarding the withdrawal.

The equation would be:

= (x / 1.2 - 600) * (1.2)

=0.88x

Therefore, the unique value to could be answered and the sufficient to answer.

NOTE: The options are missing. So I am providing the answer with the options.