Question

Verify, using the FV = PV(1+r)^t, that $1000 invested today would be worth >$1,600 in 5 years at 10%; nearly $2,600 in 10 years at 10%; >$10,800 in 25 years at 10%; and almost $117,400 in 5 years at 10%

Answer 1

Part 1) We are given the following information:

Value invested at time 0	PV	$                        1,000.00
rate of interest	r	10.00%
number of years	t	5
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $1610.51, which is greater than 1600 as required to be verified

Part 2) We are given the following information:

Value invested at time 0	PV	$                        1,000.00
rate of interest	r	10.00%
number of years	t	10
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $2,593.74 , which is nearly 2600 as required to be verified

Part 3) We are given the following information:

Value invested at time 0	PV	$                        1,000.00
rate of interest	r	10.00%
number of years	t	25
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $10,834.71, which is greater than 10800 as required to be verified

Part 4) (question has a typo of a missing 0)

We are given the following information:

Value invested at time 0	PV	$                        1,000.00
rate of interest	r	10.00%
number of years	t	50
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the FV is $117,390.85 , which is almost 117400 as required to be verified