Answer:
Step-by-step explanation:
AI-generated answer
The $1,210 value referred to in this question is the future value of the $1,000 investment after two years, compounded annually at a rate of 10%.
To calculate the future value, we can use the formula for compound interest:
\[FV = PV \times (1 + r)^n\]
Where:
- FV is the future value
- PV is the present value (initial investment)
- r is the interest rate
- n is the number of compounding periods
In this case, the present value (PV) is $1,000, the interest rate (r) is 10% (or 0.10), and the number of compounding periods (n) is 2.
Plugging in these values into the formula:
\[FV = 1,000 \times (1 + 0.10)^2\]
\[FV = 1,000 \times (1.10)^2\]
\[FV = 1,000 \times 1.21\]
\[FV = 1,210\]
So, the $1,210 value is the future value of the $1,000 investment after two years. It represents the total amount that the investment will grow to, includingearned both the initial
.