Suppose an investor invests $2,000 at the beginning of each year. What will be the value of the investment at the end of ten years if he earns ten percent?

Question

Quizplus · Accepted Answer

This is a case of annuity compounded annually. The formula for the future value of an annuity is FV = PMT * [(1+i)^n - 1]/i, where PMT is the payment made each period, i is the interest rate, and n is the number of periods.
In this case, PMT = $2,000, i = 10% and n = 10. Plugging these values into the formula, we get:
FV = $2,000 * [(1+0.1)^10 - 1]/0.1 = $35,062. Therefore, the best choice is B.

Suppose an Investor Invests $2,000 at the Beginning of Each