Some investments in the stock market have earned 10% annually. At this rate, earnings can be found using the formula upper A equals upper P left-parenthesis 1.10 right-parenthesis superscript n baseline, where A is the total value of the investment, P is the initial value of the investment, and n is the number of years the money is invested. If $1,500 is invested in the stock market at this annual rate of return, what is the expected total value after 18 years?
To find the expected total value after 18 years, we plug in the values into the formula:
A = P(1 + r)^n
Where:
P = $1,500
r = 0.10 (10% annual return)
n = 18 years
A = $1,500(1 + 0.10)^18
A = $1,500(1.10)^18
A = $1,500(5.1936677)
A ≈ $7,790.50
Therefore, the expected total value after 18 years is approximately $7,790.50.