Investments in the stock market have increased at an average compound rate of ab

Question

Investments in the stock market have increased at an average compound rate of about 5% since 1919. It is now 2012. a. If you invested $1,000 in the stock market in 1919, how much would that investment be worth today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Investment $ ____________ b. If your investment in 1919 has grown to $1 million, how much did you invest in 1919? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What is present value __________ Present value $ check my workreferencesebook & resources eBook: Future Values and Compound InteresteBook: Present Values Worksheet Learning Objective: 05-01 Calculate the future value to which money invested at a given interest rate will grow. Difficulty: Basic Learning Objective: 05-02 Calculate the present value of a future payment

Explanation / Answer

a) value is 1000 * 1.05^93 = 93,455.49

b) Value is 1000000 / 1.05^93 = 10,700.28

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