An investor wants to invest $30,000 today in a stock today that has an expected average compoundrate of return of 7.7% annually over the next five years. If all dividends are reinvested, what will bethe value of this investment at the end of the five-year period if the expectation about future returns is correct?
A) $45,525
B) $41,550
C) $46,975
D) $43,471

Question

Quizplus · Accepted Answer

The future value of an investment can be calculated using the formula: FV = PV * (1 + r)^n, where PV is the present value ($30,000), r is the annual interest rate (7.7% or 0.077), and n is the number of years (5). Plugging in these values: FV = 30000 * (1 + 0.077)^5 = $43,471.

An Investor Wants to Invest $30,000 Today in a Stock