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 1911. It is now 2012.

a.  
If you invested $1,000 in the stock market in 1911, 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 1911 has grown to $1 million, how much did you invest in 1911? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value   $   

Explanation / Answer

a) FV = 1000*1.05^(2012-1911) = $138076.32

b) PV = 1,000,000/(1.05^(2012-1911)) = $7242.37

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.