Investing in Stock?

Question

Find the amount invested today in small company stocks that would be worth $1 million in 50 years, assuming that small company stocks continue to return 14.9% annually for the next 50 years.

Answer 1

Rule number one in finance:

"Past performance is no indication of future returns"

It is very unlikely this stock will continue to make such solid return for the next 50 years.  Good luck though.

Answer 2

$963.8   is the present value.

if you earned 14.9% annually on a $963.8 investment for 50 years, you'd have $1 meellion dollars.

PV = 1 / (1+ r)^n

Answer 3

IT'S ONLY A MILLION, why bother?

c'mon, 1 million in 50 years, thats c**p.

1 Million in 5 - 10 years, now thats good?

Answer 4

If you can find me such an investment give me a call.

Answer 5

You know what, why don't we assume that small cap stocks will return 77% for the next 50 years instead?  Lol if you dollar cost average into them, you can likely expect around 12%.

Here's your formula.

amount  = principal * (rate)^time

A = 1,000,000 * 1.12^50 = 289 mil

I don't want to do 14.9%, because I do those calculations all the time.  They are fun to do but I just can't encourage that kind of thinking.  You have the formula though.  Remember to account for inflation for real value.  rate = (interest/inflation) = (1.12/1.035)

My bad you asked for what will become a million

Well

1,000,000 = P*289

P = 1,000,000/289 = $3460.21

That's 12% again

Start learning about investing and about how you can make more rather than how much you could make.  Good money managers can average 30%.