Question

Help me!

A coin collection is purchased for $1,000. Twenty years later, the owner is told that the collection is worth quite a bit of money! If the rate of return on the stamp collection is 4% per year, what is the current value of the stamp collection? In your final answer, include all of your calculations.

Answer 1

`y = 1000(1 + 0.04)^(20)`

`y = 1000(1.04) {}^(20)`

Rounded to the nearest hundredth

`y = 1000(2.19)`

`y = 2190`
The current value is about $2190

Answer 2

The current value of the stamp collection is of $2190.70

Explanation:

Year 0: $1000

Year 1: $1040 (1000 + 1000x4/100)

Year 2: $1081.6 (1040 + 1040x4/100)

Year 3: $1124.8 (1081.6 + 1081.6x4/100)

Year 4: $1169.8 (1124.8 + 1124.8x4/100)

Year 5: $1216.6 (1169.8 + 1169.8x4/100)

Year 6: $1265.2 (1216.6 + 1216.6x4/100)

Year 7: $1315.8 (1265.2 + 1265.2x4/100)

Year 8: $1368.4 (1315.8 + 1315.8x4/100)

Year 9: $1423.1 (1368.4 + 1368.4x4/100)

Year 10: $1480 (1423.1 + 1423.1x4/100)

Year 11: $1539.2 (1480 + 1480x4/100)

Year 12: $1600.7 (1539.2 + 1539.2x4/100)

Year 13: $1664.8 (1600.7 + 1600.7x4/100)

Year 14: $1731.4 (1664.8 + 1664.8x4/100)

Year 15: $1800.6 (1731.4 + 1731.4x4/100)

Year 16: $1872.6 (1800.6 + 1800.6x4/100)

Year 17: $1947.5 (1872.6 + 1872.6x4/100)

Year 18: $2025.4 (1947.5 + 1947.5x4/100)

Year 19: $2106.4 (2025.4 + 2025.4x4/100)

Year 20: $2190.7 (2106.4 + 2106.4x4/100)