Which of the following investments has a larger future value: A $100 investment

Question

Which of the following investments has a larger future value: A $100 investment earning 10% per year for 5 years or a $100 investment earning 5% per year for 10years?

A.

An investment of $100 invested at 10% per year for 5 years because it has a future value of $161.05.

B.

An investment of $100 invested at 5% per year for 10 years because it has a future value of $161.05.

C.

An investment of $100 invested at 5% per year for 10 years because it has a future value of $162.89.

D.

An investment of $100 invested at 10% per year for 5 years because it has a future value of $162.89.

Explanation / Answer

A. FV=100*1.10^5=161.05

B.FV=100*1.05^10=162.89

C.FV=100*1.05^10=162.89

D.FV=100*1.10^5=161.05

Thus

FV OF : A $100 investment earning 10% per year for 5 years=161.05

FV OF $100 investment earning 5% per year for 10years =162.89

a $100 investment earning 5% per year for 10years giver higheer value

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