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Problem 16-06

You invest $1,800 in stock A and $1,800 in stock B. If you earn 8 percent on stock A and 7 percent on stock B and hold each security for 20 years, what are the terminal values for each investment? Round your answers to the nearest cent.

Stock A: $

Stock B: $

If you continue to hold each security and earn the same returns for 29 years, how much more will stock A generate than stock B over the entire time period? (When you invest for retirement, you should think about the impact of returns over time.) Round your answer to the nearest cent.

$