Ask Question
10 December, 15:01

Joanne invested $15,000 six years ago. Her arithmetic average return on this investment is 8.72 percent, and her geometric average return is 8.50 percent. What is Joanne's portfolio worth today?

A. $23,989

B.$24,472

C. $26,409

D. $26,514

E. $26,766

+2
Answers (1)
  1. 10 December, 15:06
    0
    B) $24,472

    Explanation:

    To calculate the present value of Joanne's investment, we need to calculate the future value of the investment 6 years ago. The formula we are going to use is:

    FV = principal x (1 + r) ⁿ

    principal = 15,000 n = 6 years r = geometric average return

    FV = $15,000 x (1 +.085) ⁶ = $15,000 x 1.085⁶ = $15,000 x 1.6315 = $24,472
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Joanne invested $15,000 six years ago. Her arithmetic average return on this investment is 8.72 percent, and her geometric average return ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers