Compute the future value of $6,750, which is invested for 65 years at an annual rate of return of 8%.<\/p>\n\n\n\n
The correct answer and explanation is:<\/mark><\/strong><\/p>\n\n\n\n The future value (FV) of an investment can be calculated using the formula: FV=PV\u00d7(1+r)tFV = PV \\times (1 + r)^t<\/p>\n\n\n\n Where:<\/p>\n\n\n\n Substitute the values: FV=6750\u00d7(1+0.08)65FV = 6750 \\times (1 + 0.08)^{65}<\/p>\n\n\n\n First, calculate the growth factor: 1+0.08=1.081 + 0.08 = 1.08<\/p>\n\n\n\n Then raise it to the power of 65: 1.08651.08^{65}<\/p>\n\n\n\n Using a calculator: 1.0865\u2248374.4861.08^{65} \\approx 374.486<\/p>\n\n\n\n Now multiply by the initial investment: FV=6750\u00d7374.486\u22482,527,813FV = 6750 \\times 374.486 \\approx 2,527,813<\/p>\n\n\n\n Future Value \u2248 $2,527,813<\/strong><\/p>\n\n\n\n The future value formula accounts for compound interest, which means the investment earns interest on both the initial amount and the accumulated interest over time. Here, the 8% annual return compounds every year for 65 years. Because of this compounding effect, even a moderate interest rate can lead to a very large future value when the investment horizon is long.<\/p>\n\n\n\n The factor (1+r)t(1 + r)^t shows how much $1 invested today would grow over the time period. In this case, $1 grows roughly 374 times over 65 years at 8% interest. Multiplying this by the initial $6,750 yields the total accumulated amount.<\/p>\n\n\n\n Long-term investments benefit greatly from compound interest, which makes investing early and maintaining the investment a powerful strategy for wealth growth. Even though 8% might seem modest, the time span of 65 years creates an exponential growth effect, turning thousands of dollars into millions.<\/p>\n\n\n\n This demonstrates the importance of time in investing. The longer the money is invested at a positive rate of return, the greater the power of compounding to multiply the initial investment, resulting in significant wealth accumulation over decades.<\/p>\n","protected":false},"excerpt":{"rendered":" Compute the future value of $6,750, which is invested for 65 years at an annual rate of return of 8%. The correct answer and explanation is: The future value (FV) of an investment can be calculated using the formula: FV=PV\u00d7(1+r)tFV = PV \\times (1 + r)^t Where: Substitute the values: FV=6750\u00d7(1+0.08)65FV = 6750 \\times (1 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-33956","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33956","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=33956"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33956\/revisions"}],"predecessor-version":[{"id":33957,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33956\/revisions\/33957"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=33956"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=33956"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=33956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n\n\n\nExplanation<\/h3>\n\n\n\n