You plan to put $1,500 in an investment account today. What will it be worth in 20 years if you invest half in corporate bonds that pay 4% per year and half in corporate stock that earns 9% per year? Assume annual reinvestment of returns and round to the nearest dollar.

Question

Quizplus · Accepted Answer

Half of $1,500 is $750. The $750 in bonds grows at 4% annually: $750 * (1.04^20) = $1,641. The $750 in stocks grows at 9% annually: $750 * (1.09^20) = $4,206. Adding both gives $1,641 + $4,206 = $5,847.

You Plan to Put $1,500 in an Investment Account Today