Ten years ago, Hailey invested $1,000 and locked in a 9 percent annual rate for 30 years (end 20 years from now). Aidan can make a 20-year investment today and lock in an 8 percent rate. How much money should he invest now in order to have the same amount of money in 20 years as Hailey?
A) $1,589.03
B) $2,846.56
C) $3,109.48
D) $2,109.73

Question

Quizplus · Accepted Answer

Hailey's investment will grow to $1,000 * (1 + 0.09)^30 in 30 years. To find the equivalent investment for Aidan, solve for the present value using the formula: Future Value = Present Value * (1 + 0.08)^20. Solving gives Aidan's required investment as $2,846.56.

Ten Years Ago, Hailey Invested $1,000 and Locked in a 9