Investments in the stock market have increased at an average compound rate of about 5% since 1902. It is now 2012.

Investments in the stock market have increased at an average compound rate of about 5% since 1902. It is now 2012.

a.	If you invested $1,000 in the stock market in 1902, how much would that investment be worth today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Investment

$

b.	If your investment in 1902 has grown to $1 million, how much did you invest in 1902? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value

$

Explanation:

Since we are assuming that it is currently 2012, 110 years have passed since 1902.

a.

$1,000 × (1.05)110 = $214,201.69

b. PV × (1.05)¹¹⁰ = $1,000,000 PV = $4,668.50