If you invest $15,000 every year and expect to increase your investment by 6% each year for the next 20 years, what will be the present worth of your investment if it earns 7% per year?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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If you invest $15,000 every year and expect to increase your investment by 6% each year for the next 20 years, what will be the present worth of your
investment if it earns 7% per year?
O $147,671
Reason: The geometric gradient percentage and the interest rate percentage were interchanged during the substitution.
O $256,823
O $134,436
Reason: If n was 10, then this would have been the right answer.
O $993,823
Reason: This is the future worth of the investment at the end of the 20th year.
Correct Answer
$256,823
Transcribed Image Text:If you invest $15,000 every year and expect to increase your investment by 6% each year for the next 20 years, what will be the present worth of your investment if it earns 7% per year? O $147,671 Reason: The geometric gradient percentage and the interest rate percentage were interchanged during the substitution. O $256,823 O $134,436 Reason: If n was 10, then this would have been the right answer. O $993,823 Reason: This is the future worth of the investment at the end of the 20th year. Correct Answer $256,823
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