Question

Mark saves a fixed percentage of his salary throughout each year. This year he saved $1500. For the next 5 years, he expects his salary to Increase at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He Invests his money evenly twice a year In the stock market. There thus will be six midyear investments and six end of year investments. Solve the problem by using the geometric gradient factor 1. How much will the investment be worth at the end of the six years I they increase in the stock market at a 10% annual rate? Select one: O a. $13,975 b. $12,911 c. $13,512 o d. $13,853

Answer 1

Solo Given Data & out Mark saves a fined percentage of his salary through each • This year. year he sav. nents and six and the s year he saved $1500. the For the next 5 years Expects his us Salary salary to to increase increase at an 8% annual rate He Invests his money evenly twice a year in the Stock market. Thus there will be sin mid year investments and sin of year investments. We have to find the how much will the investment worth be worth at the end of the six years. They increase in Stock market at 10% Invest ment value is the amount of money an investor would amount of money an! pay for property. it can conclude a certain return on investment, The Geometric gradient to present worth tauation. present worth (p = An(1+)! 8% = $1500 (6) (1.08) 10.08 = 8,333 [VE 9%, Future worth (F) = P(Flp -184.16) = 8333 ( 16933-10%, 16) = 6333 (1-687) = $13975 option e correct