Final answer:
To calculate the future value of shares after a 12% appreciation in one year, use the formula FV = PV (1 + r)^n. After substituting the given values, the total value of the shares would be $560.
Step-by-step explanation:
The question involves calculating the future value of an investment given a certain interest rate over a period of one year. To find the total value of the investor's shares after they appreciate by 12%, we use the formula for future value:
FV = PV (1 + r)^n
where:
- PV = Present Value of the investment ($500)
- r = annual interest rate (12% or 0.12)
- n = number of years (1 year)
We substitute the given values into the formula:
FV = $500 (1 + 0.12)^1
Calculating the future value:
FV = $500 (1.12)
FV = $560
After a year, at a 12% appreciation, the total value of the investor's shares would be $560.