$100 invested at a rate of 5% for 10 years has the same future value as $100 invested at 10% compounded annually for 5 years.

Question

Quizplus · Accepted Answer

The future value of an investment is calculated using the formula FV = PV(1 + r)^n, where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years. For the first scenario (5% for 10 years), the future value is $100(1 + 0.05)^10 = $162.89. For the second scenario (10% for 5 years), the future value is $100(1 + 0.10)^5 = $161.05. Therefore, the future values are not the same.

$100 Invested at a Rate of 5% for 10 Years