Future Value "FV" = Present Value(1 + r)^n, where r is in decimal form...
FV = $5(1.05^107)
= $5(185.03548)
= $925.17738, round to $925.18
Instead, why don't you assume he invested in GM stock? or Enron? or Washington Mutual Bank?
idk why schools are pushing stocks and the stock market so much.
Secondly, you have to know his tax rate. It is not kosher to claim he reinvested it all, when he is turning around and paying the taxes out of his other pocket.
And why great great? My grandfather was an adult in 1903 (but never bought any Ford stock.)
P S Forefather sounds nicer than "ancestor."
There is also a huge difference between dollar amount and purchasing power.
UM, THE TEXT BOOK, AS ALWAYS, FORGETS TO FACTOR IN INFLATION which, in many cases, can, alone, eat up all your gains. This particular formula, as presented, needs improving, but at least, is a good start.
Presume that your great great grandfather purchased a common stock certificate from Ford Motor Company for $5 when stock was first issued in 1903. Suppose that every time a dividend was paid, your ancestor reinvested the return into more ford stock (simulating compound interest). If returns on ford common stock have average 5%, and dividends paid annually, how much is the value of the stock you inherited in 2010?
