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Chapter 4: Q 12BP (page 282)

You invest a single amount of $10,000 for 5 years at 10 percent. At the end of 5 years you take the proceeds and invest them for 12 years at 15 percent. How much will you have after 17 years?

Short Answer

Expert verified

The investor will have $86,166.31 after 17 years.

Step by step solution

01

Identification of the required information

Present value (PV) = $10,000

Period (n1) = 5 years

Period (n2) = 12 years

Interest Rate (i1) = 10%

Interest Rate (i2) = 15%

02

Future value (FV) after 17 years

FV=PV脳1+i1n1脳1+i2n2=$10,000脳1+10%5脳1+15%12=$86,166.31

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