Question

You have decided to invest $1,000 at a rate of 10% per year during the first 10 years. After that, you will be more conservative and expect to earn 6% per year. How much will you have accumulated at the end of 20 years from now?

Please use excel formulas for answer.

Answer 1

Future Value = Present Value*((1+r)^t)
where r is the interest rate that is 10% for the first ten years and 6% for the next 10 years.
t is the time period in years
The value of 1000 after 10 years at an interest rate of 10%
1000*((1+.1)^10)
2593.74
After 10 years the interest rate changes to 6%.
2593.74*((1+.06)^10)
4645.00
At the end of 20 years you would have accumulated $4645.