You are considering an investment that is expected to pay 3 percent in year 1, 5
ID: 2631826 • Letter: Y
Question
You are considering an investment that is expected to pay 3 percent in year 1, 5 percent in years 2 and 3 and 7 percent in year 4. If you invest $1,000 today, what will this investment be worth at the end of the fourth year?You are considering an investment that is expected to pay 3 percent in year 1, 5 percent in years 2 and 3 and 7 percent in year 4. If you invest $1,000 today, what will this investment be worth at the end of the fourth year?
You are considering an investment that is expected to pay 3 percent in year 1, 5 percent in years 2 and 3 and 7 percent in year 4. If you invest $1,000 today, what will this investment be worth at the end of the fourth year?
Explanation / Answer
Hi,
Please find the detailed answer as follows:
Future Value at the End of Year 4 = 1000*(1+.03)^1*(1+.05)^2*(1+.07)^1 = $1215.07
Answer is $1215.07.
Thanks.
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