Your parents spent $6,200 to buy 500 shares of stock in a new company 13 years ago. The stock has appreciated 10 percent per year on average. What is the current value of those 500 shares

The current value of those 500 shares is $21,404.08.

Here, we are to calculate the Current value of the 500 shares bought by the parent.

Given Information

$6,200 spent to buy 500 shares

n = 13 years ago.

Stock appreciated 10%

Current value of the shares = $6,200*(1 + 10%)^13

Current value of the shares = $6,200*(1.10)^13

Current value of the shares = $6,200 * 3.45227121

Current value of the shares = $21,404.08

Therefore, the current value of those 500 shares is $21,404.08.

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$21,405

Explanation:

6200 for 500 shares

Each share worth = 6200/500 = $12.40

This share price (13 years ago) increased by 10% per year. So this is compound growth for 13 years. The formula is:

Where F is the future value (we want this)

P is the initial value of stock (12.4)

r is the rate of appreciation (10% = 0.1)

t is the time in years (t = 13)

So, the value of share is:

So, 500 shares now would be worth:

42.81 * 500 = $21,405

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