Suppose you have $2,300 to invest in a large-company stock for four years. The average annual rate of return is 6.1%. What is the real future value of your investment after four years?

Question

Quizplus · Accepted Answer

The real future value of the investment can be calculated using the formula for compound interest: FV = PV(1 + r)^n, where FV is the future value, PV is the present value ($2,300), r is the annual rate of return (6.1% or 0.061), and n is the number of years (4). Plugging in the values: FV = $2,300(1 + 0.061)^4 ≈ $2,915.

Suppose You Have $2,300 to Invest in a Large-Company Stock