Question

Arnold learned something very valuable as a teenager from his dad. he was told to invest​ $1,000 at​ 12% interest at age 20 and leave it alone until age 65.​ arnold's dad knew that one strategy that wealthy people use is to exercise self minus−discipline to never touch this longminus−term plan. arnold is very happy he applied his​ dad's advice. if he sticks to this​ plan, arnold's savings will have grown to approximately​ ________ by age 62.

Answer 1

Investment (PV) = $1,000

number of year (n) = 62-20 = 42 years

Interest rate = 12% = 0.12

The future value (FV) is calculated using the formula :

FV = PV*(1+r)^n where

PV =1000

r = 0.12

n = 42

FV = 1000*(1+0.12)^42

FV =1000*1.12^42

FV = 116,723.14 (Rounded to 2 decimals)

Therefore, Arnold's savings will have grown to approximately​ $116,723.14 by age 62.