Question

Some investments in the stock market have earned 10% annually. At this rate earnings can be found using the formula A=P(1.10)^n, where A is the total value of the investment ,P is the initial value of the investment and n is the number of years the money is invested. If 2,500 is invested in the stock market at this annual rate of return what is the expected total value after 18 years

-49,500 -46,750 -13,899.79 -12,636.18

Answer 1

A=2500(1.10)^18
A==13,899.79

Answer 2

The future value of the investment after 18 years is $13899.79

Explanation:

Using the expected annual rate given to us, we can calculate the future value of the amount invested today. The principal or P today is $2500. We need to find out the value of this amount after 18 years. thus, n is 18. The rate to calculate the future value is constant at 10%. Using the provided formula for future value, we calculate the future value to be,

A = P (1.10)^n

A = 2500 (1.10)^18

A = $13899.79