Question

Value of Investment. Tammy has $3,530 that she wants to invest in stock. She believes she can earn a 14% annual return. What would be the value of Tammy's investment in 10 years if she is able to achieve her goal? The value of Tammy's investment in 10 years would be $_____ enter your response here. (Round to the nearest dollar.

Answer 1

Tammy's investment of $3,530 at a 14% annual return over 10 years would grow to approximately $9,743 when rounded to the nearest dollar, using the formula for compound interest.

Step-by-step explanation:

To calculate the future value of Tammy's investment, we can use the formula for compound interest, which is A = P(1 + r/n)^(nt). Since Tammy is investing $3,530 at a 14% annual return, compounded once a year (n=1) for 10 years (t=10), the calculation will be as follows:

A = 3530(1 + 0.14/1)^(1*10) = 3530(1.14)^10

Using a calculator to compute this, we find:

A ≈ 3530 * (2.75811) ≈ 9743.1977

Rounded to the nearest dollar, the future value of Tammy's investment would be $9,743.