Question

Asked Feb 7, 2020

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Lee Put $10,000 in the stock market index mutual fund that grew at an average of 7% per year for 10 years. About how much is Lee's mutual fund account after 10 years? ignore compounding

Step 1

We need to use the concept of time value of money to solve the question. According to the concept of time value of money, the value of money available at the present time is more compared to the same sum in some future time. This is because of the earning potential of money, that is, we can earn interest on money by investing.

Step 2

The formula for time value of money is:

Step 3

Given that;

Present value is $10,000

Interest rate is 7%

Time period is 10 yea...

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