Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1909. It is now 2016. Required:
a. If someone invested $1,000 in 1909, how much would that investment be worth today?
b. If an investment from 1903 has grown to $1 million, how much was invested in 1903?
c.

a. If someone invested $1,000 in 1909, the investment's worth today is $185,035.48

b. If an investment from 1903 has grown to $1 million, the amount invested in 1903 is $4,032.82

Explanation:

a) FV (Future Value)$185,035.48

PV (Present Value)$1,000.00

N (Number of Periods)107.000

I/Y (Interest Rate)5.000%

PMT (Periodic Payment)$0.00

Starting Investment$1,000.00

Total Principal$1,000.00

Total Interest$184,035.48

b) You will need to invest $4,032.82 at the beginning to reach the future value of $1,000,000.00.

FV (Future Value)$999,999.00

PV (Present Value)$4,032.82

N (Number of Periods)113.000

I/Y (Interest Rate)5.000%

PMT (Periodic Payment)$0.00

Starting Investment$4,032.82

Total Principal$4,032.82

Total Interest$995,966.1

the correct answer is b.)

answer(b) gdp is not affected by

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