Question
H.G. Wells wrote the novel Time Machine in 1895. What some people dont know is that he had a grandson named K.J. and that H.G.
H.G. Wells wrote the novel Time Machine in 1895. What some people dont know is that he had a grandson named K.J. and that H.G. Wells actually took a Time Machine to the year 2020. While in the future, H.G. Wells invested $100,000 (a princely sum in 1895) in the name of M.L. Wells. When he came back to 1895, H.G. told his grandson K.J. to make sure that if he ever gets a grandchild to make sure the babys name is M.L. Wells and that the child would have $100,000 in its name in the year 2020. After thinking about this awhile, young K.J. decided that his grandfather had gone through an awful lot of trouble to try and make K.J.s future grandchild wealthy. Assuming an inflationary (market) rate of 4%, how much would H.G. have needed to invest in 1895 for it to grow to $100,000 in 2020 (in other words, what is the Present Value of the $100,000)? Second, if H.G. had invested the $100,000 in 1895 and not 2020, how much would it have grown to by 2020 assuming the same 4% rate?
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