Question

B) Kathy recently graduated college and her grandparents give her $10,000 as a graduation present. She can
either spend it all or invest it in a 10yr Mutual Fund paying 9.75% per year. Calculate the future value of her
mutual fund:

Answer 1

Answer:

The future value would be $21,489.51

Explanation:

Computation of future value (FV) is as follows:

FV is computed using the formula, FV = p (1+ r/100)∧t

Where p is the principal amount; r is the rate of return, and t is the investment period.

P= 10,000; r= 0.0975, and t= 10

FV= 10,000(1+0.0975)∧10

FV = $21,489.51