If you invest $1 million today, and the value of investment grow 5 percent next year and 4 percent the following year, the value of you investment in two years is closest to:
A) $1 million
B) $1.045 million.
C) $1.090 million.
D) $1.092 million.

Question

Quizplus · Accepted Answer

The value of the investment after two years can be calculated by applying the growth rates successively. After the first year, the investment grows by 5%, making it $1 million * 1.05 = $1.05 million. In the second year, it grows by 4%, making it $1.05 million * 1.04 = $1.092 million.

If You Invest $1 Million Today, and the Value of Investment