Question

Suppose your parents decide to invest $5,000 in gold. Their financial advisor anticipates that the value of gold will increase 17% every year for the next 15 years. How much would their investment be worth after 15 years?

Answer 1

To calculate the value of the investment after 15 years with an annual interest rate of 17%, we can use the formula for compound interest. By plugging in the given values, the investment would be worth approximately $27,624.27 after 15 years.

Step-by-step explanation:

To calculate the value of the investment after 15 years, we can use the formula for compound interest:

A = P(1+r/n)^(nt)

Where:
- A is the final amount
- P is the initial investment
- r is the annual interest rate (in decimal form)
- n is the number of times the interest is compounded per year
- t is the number of years

In this case, we have:
- P = $5,000
- r = 0.17 (17%)
- n = 1 (compounded annually)
- t = 15

Plugging in these values, we get:

A = $5,000(1+0.17/1)^(1*15)

A = $5,000(1.17)^15

A ≈ $27,624.27

Therefore, their investment would be worth approximately $27,624.27 after 15 years.