Answer:
- Stocks: $939,024
- Bonds: $3,828
- Cash: $577
Explanation:
You want the values of $250 investments that earn average annual returns of 7.1%, 2.3%, and 0.7% over a period of 120 years.
Compound interest
The compound interest formula is applicable. It gives the investment value as ...
A = P(1 +r)^t
where principal P earns an annual return of r for t years.
The stock fund value is ...
A = $250(1 +0.071)^120 ≈ $939,024
The Bond fund value is ...
A = $250(1 +0.023)^120 ≈ $3,828
The Cash fund value is ...
A = $250(1 +0.007)^120 ≈ $577
The values of the Stock, Bond, and Cash funds are $939024, $3828, and $577, respectively.
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