If you invest the $10,000 you receive at graduation (age 22) in a mutual fund that averages a 12% annual return, how much will you have at retirement in 40 years?
A) $909,090
B) $930,510
C) $783,879
D) $510,285

Question

Quizplus · Accepted Answer

Using the compound interest formula, we can calculate the future value of the investment:
FV = PV x (1 + r)^(n)
Where:
PV = $10,000 (present value)
r = 12% (annual interest rate)
n = 40 (number of years)

FV = $10,000 x (1 + 0.12)^40
FV = $930,510

Therefore, the best choice is B, as it is the closest value to the calculated future value.

If You Invest the $10,000 You Receive at Graduation (Age