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Jan plans to invest an equal amount of $2,000 in an equity fund every year-end beginning this year. The expected annual return on the fund is 15 percent. She plans to invest for 20 years. 
What is the present value of Jan’s investments?
  • a)
    $12,625
  • b)
    $12,519
  • c)
    $14,396
  • d)
    $12,396
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Jan plans to invest an equal amount of $2,000 in an equity fund every ...
PV20 = PMT[1-(1/(1+k)n)]/k 
= $2,000[1-(1/(1.15)20)]0.15
= 2000(6.25933)
= $12,519
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Jan plans to invest an equal amount of $2,000 in an equity fund every ...
's investment?

To calculate the present value of Jan's investment, we can use the formula:

PV = PMT x [(1 - (1 + r)^(-n)) / r]

Where:
- PV is the present value of the investment
- PMT is the annual payment or investment amount, which is $2,000
- r is the annual interest rate, which is 15% or 0.15
- n is the number of years of investment, which is 20

Plugging in the values, we get:

PV = $2,000 x [(1 - (1 + 0.15)^(-20)) / 0.15]
PV = $2,000 x [(1 - 0.026) / 0.15]
PV = $2,000 x 16.49
PV = $32,980

Therefore, the present value of Jan's investment is $32,980.
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Jan plans to invest an equal amount of $2,000 in an equity fund every ...
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Jan plans to invest an equal amount of $2,000 in an equity fund every year-end beginning this year. The expected annual return on the fund is 15 percent. She plans to invest for 20 years.What is the present value of Jan’s investments?a)$12,625b)$12,519c)$14,396d)$12,396Correct answer is option 'B'. Can you explain this answer?
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