Problem 16-06

You invest $700 in stock A and $700 in stock B. If you earn 13 percent on stock A and 7 percent on stock B and hold each security for 17 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 27 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.

$_______