Suppose that you invest $5,000 in a mutual fund at the end ofeach year for...

Suppose that you invest $5,000 in a mutual fund at the end of each year for the next 30 years. This period of time is your planned holding period. You intend to leave these contributions and any fund distributions earned in the account until the end of your holding period. Your forecast rate of return on this mutual fund is 9% per year, compounded annually.

What is the forecast value of your account at the end of your holding period?

Round your answer to the nearest dollar.

Solutions

Expert Solution

Periodic yearly Investment in mutual Fund for next year is $5,000

Calculating the Future Value of yearly Investment at the end of planned holding period using the Future value of Ordinary Annuity Formula:

Where, C= Periodic Investments = $5000

r = Periodic Interest rate = 9%

n= no of periods = 30

Future Value = $681,537.69

So, the forecast value of your account at the end of your holding period is $681,538

jeff jeffy answered 2 years ago

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