Question

Future value​ (with changing interest​ rates). Jose has ​$6 comma 000 to invest for a 2​-year period. He is looking at four different investment choices. What will be the value of his investment at the end of 2 years for each of the following potential​ investments? a. Bank CD at 4​%. b. Bond fund at 7​%. c. Mutual stock fund at 11​%. d. New venture stock at 23​%. a. What will be the value of​ Jose's bank CD investment that offers an annual rate of return of 4​% for 2 ​years?

Answer 1

a.- CD 6,489.60

b.- Bonds 6,869.40

c.- Mutual stock 7,392.60

d.- Venture Stock 9,077.40

Step-by-step explanation:

We will calculate the future value of a lump sum:

`Principal \: (1+ r)^(time) = Amount`

Principal $6,000.00

time 2 years

rate 4% = 0.04000

`6000 \: (1+ 0.04)^(2) = Amount`

Amount 6,489.60

b.- bond fund rate 7%

rate 0.07000

`6000 \: (1+ 0.07)^(2) = Amount`

Amount 6,869.40

c.- Mutual fund rate 11%

rate 0.11000

`6000 \: (1+ 0.11)^(2) = Amount`

Amount 7,392.60

d.- venture stock rate 23%

rate 0.23000

`6000 \: (1+ 0.23)^(2) = Amount`

Amount 9,077.40