Your coin collection contains ten 1949 silver dollars. If your grandparents purchased them for their face value when they were new, how much will your collection be worth when you retire in 2050, assuming they appreciate at a 6.1 percent annual rate?
A) $3,550.61
B) $3,697.29
C) $3,728.54
D) $3,955.98
E) $4,197.29

Question

Quizplus · Accepted Answer

Using the formula for calculating compound interest:

A = P(1 + r/n)^(n*t)

Where: 
A = final amount
P = initial principal (face value of each silver dollar = $1)
r = annual interest rate (6.1%)
n = number of times the interest is compounded per year (assume annually)
t = time (2050 - 1949 = 101 years)

Plugging in the values:

A = 10(1 + 0.061/1)^(1*101)
A = $3,955.98

Therefore, the collection will be worth $3,955.98 when the owner retires in 2050. The answer is D.

Your Coin Collection Contains Ten 1949 Silver Dollars