Assume that instead of spending $30,000 on your wedding, you only spend $5,000. You use the remaining $25,000 to buy stocks/bonds and you hold them for 40 years. Calculate the Future Value on $25,000: If your portfolio's rate of return is 8% (i = 0.08), Future Value = If your portfolio's rate of return is 6% (i = 0.06), Future Value = %3D
Assume that instead of spending $30,000 on your wedding, you only spend $5,000. You use the remaining $25,000 to buy stocks/bonds and you hold them for 40 years. Calculate the Future Value on $25,000: If your portfolio's rate of return is 8% (i = 0.08), Future Value = If your portfolio's rate of return is 6% (i = 0.06), Future Value = %3D
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Compounding: the accumulation of a sum of money
when the interest earned on the sum earns
additional interest. Because of compounding, small
differences in interest rates lead to big differences
over time.
Assume that instead of spending $30,000 on your
wedding, you only spend $5,000. You use the
remaining $25,000 to buy stocks/bonds and you
hold them for 40 years.
Calculate the Future Value on $25,000:
If your portfolio's rate of return is 8% (i = 0.08),
Future Value =
If your portfolio's rate of return is 6% (i = 0.06),
Future Value =
In a 200-word paragraph, please summarize the
results of your calculations and list three things that
you learned from this exercise.
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