Answered

a. You have $15,750 you want to invest for the next 34 years. You are offered an investment plan that will pay you 9 percent per year for the next 17 years and 13 percent per year for the last 17 years. How much will you have at the end of the 34 years?

b. If the investment plan pays you 13 percent per year for the first 17 years and 9 percent per year for the next 17 years, how much will you have at the end of the 34 years?

Answer :

Answer:

a) $544,331

b) $544,334

Explanation:

a)

The amount of your investment at the end of the first 17 years is:

FV(1) = 15,750 x 1.09^17 = $68,160

The amount of your investment at the end of 34 years is:

FV(2) = 68,160 x 1.13^17 = $544,331

b)

The amount of your investment at the end of the first 17 years is:

FV(1) = 15,750 x 1.13^17 = $125,781

The amount of your investment at the end of 34 years is:

FV(2) = 125,781 x 1.09^17 = $544,334

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