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This exercise compares the future value of investing an amount of money in different time frames. A total of $20,000 is invested into funds paying
This exercise compares the future value of investing an amount of money in different time frames. A total of $20,000 is invested into funds paying 5% interest over a 20-year period. Compute the future value at the end of 20 years for each of the following: (Round your final answers to two decimal places.) (a) $1000 is invested in an annuity each year for 20 years. $ (b) $2000 is invested in an annuity each year for 10 years. After the first 10 years, the money remains in the fund, drawing 5% interest compounded annually. $ (c) The entire $20,000 is invested at the beginning and remains in the fund, drawing 5% interest compounded annually. $ (d) Comment on the best strategy to accumulate wealth over the long term. This example shows that it does not matter how you invest your money, you still end up with about the same amount in the end. This example shows that the sooner you invest your money, the greater your future value will become. This example shows that the later you invest your money, the greater your future value will become. This example shows that it is better to invest a little bit of money every year, since you end up with a greater future value. x
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