Question

An investment of $5,610 made five years ago in a stock mutual fund that earned an...

An investment of $5,610 made five years ago in a stock mutual fund that earned an annual compound return of 6.8% during the initial three years, followed by an annual compound return of 4% over the most recent two years would be worth how much today? Note: Please round your answer to the nearest dollar. For example, if the calculated value of the investment today is 1,234.78 enter it as: 1235 or 1,235.

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Answer #1

Investment made 5 years ago in Mutual Fund = $5610

For the first 3 years investment earned annual compound return of 6.8%.

Therafter for next 2 years investment earned annual compound return of 4%

Calculating the Value of Investment after 5 years:-

where, Invested Amount = $5610

r1 = Annual compound return for first 3 years = 6.8%

r2 = Annual compound return for Last 2 years = 4%

Future Value = $7391.68

So, Investment value worth today is $7392

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