When you were two-years-old, your grandmother left you a trust fund with $10,000 in it that...

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When you were two-years-old, your grandmother left you a trust fund with $10,000 in it that...

When you were two-years-old, your grandmother left you a trust fund with $10,000 in it that has been earning 12% for 20 years. How much is in the trust fund now, based on annual compounding? (use financial calculator and please show work).

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Answer 1

Answer #1

The amount of $10000 is invested for a period of 20 years @ 12% per annum compounded annually.

We can use the formula,

FV = PV (1+i)^n

where,

FV = Future Value

PV = Present Value

i = Interest rate

n = number of years

FV = $10000 * (1.12)^20

FV = $10000 * 9.6463

FV = $ 96463

Therefore current value of the investment is $96463.

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Answer 2

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