C O https:/inewconnect. ucation.com/flow/connect.html Homework 16 Help Save & Ex
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C O https:/inewconnect. ucation.com/flow/connect.html Homework 16 Help Save & Exit Submit Check my work 3 Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1912. It is now 2016. 10 points a. If someone invested $1,000 in 1912, how much would that investment be worth today? (Do not round intermediate calculations. Round your answer to 2 declmal places.) eBook Print b. If an investment from 1912 has grown to $1 million, how much was invested in 1912? (Do not round intermediate calculations. Round your answer to 2 decimal places.) References Present value Prev 3 ofNext >Explanation / Answer
Total periods = 2016 - 1912 = 104
1)
Future value = Present value ( 1 + r)n
Future value = 1,000 ( 1 + 0.05)104
Future value = 1,000 * 159.8406
Future value = $159,840.60
2)
Present value = Future value / ( 1 + r)n
Present value = 1,000,000 / ( 1 + 0.05)104
Present value = 1,000,000 / 159.8406
Present value = $6,256.23
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