18. From 1965 to 2018, the S&P 500 stock portfolio has generated an annual average stock return of 9.7% per year. Meanwhile, during those years, Vir Cotto has been investing $1,000 per year into the S&P 500 stock portfolio. How much would be Vir’s investment value by the end of 2018?
a) below $10,000,000
If we take $1,000 to be added every year from 1965 to 2018, we have $54,000 which is (2018-1965+1)*$1,000 invested.
Now the fund is giving annual returns of 9.7% per year.
So if we take in the second year he wll have $1,000 from year 2 + $1,000 from year 1 + $97(9.7%) interest of year 1
We need to do this task from 1965 to 2018
And our compounding results come to be roughly $ 1518615.631 which is $1.5 million
Attaching the complete excel calculation such that you can have a look
Column 3 has 1.097 times the previous year balance + $1,000 of that year --> Net Value in nth Year
18. From 1965 to 2018, the S&P 500 stock portfolio has generated an annual average stock...
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