Thursday, June 5, 2008
Investing at 10% per year
Case B: Investing $1000 at 10% per year
Suppose you invest $1000 today at a 10% rate of return. Using the equation above, we can calculate the future value of this one time investment.
FV = ($1,000) (1.10)n where n = the number of years
After 10 years, this single $1,000 investment will be worth:
FV = ($1,000) (1.10)10 = $2,594
After 20 years, this single $1,000 investment will be worth:
FV = ($1,000) (1.10)20 = $6,727
After 30 years, this single $1,000 investment will be worth:
FV = ($1,000) (1.10)30 = $17,449
After 40 years, this single $1,000 investment will be worth:
FV = ($1,000) (1.10)40 = $45,259
After 50 years, this single $1,000 investment will be worth:
FV = ($1,000) (1.10)50 = $117,391
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Now thats a return that I can live with.
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