Suppose you were given $100,000 by your grandparents and told that you could spend half of it but were to invest the other half to give your own grandchild a gift. What concept would you use to figure out how much your present to your grandchild would be worth in 40 years?
A)Present Value
B)Future Value
C)The Rule of 72
D)Internal Rate of Return

Question

Quizplus · Accepted Answer

The concept needed to calculate the future value of the investment over 40 years is the Future Value. With this knowledge, you can determine how much of the initial $100,000 you should invest to reach a desired future value for the gift to your grandchild. The Rule of 72 is a shortcut method for estimating the number of years it takes to double an investment, and Internal Rate of Return is a calculation used to determine the profitability of an investment, but neither would be applicable for this scenario.

Suppose You Were Given $100,000 by Your Grandparents and Told