TOPIC: Future Value of Investment calculation

Hello,

Did anyone encounter a question to calculate a future value of an investment in a PMP exam. this question I encoutered when taking PMP prep questions and I did not know how to answer.

Thank you

Farid

Hi Farid,

I did not encounter this type of question on my PMP exam. Do you recall the entire question? If so, please provide it as it may help us assist you further. Thanks!

me neither, i didn't encounter such type of questions. it would be great if you share a sample question for that.

Here is the question

You are investing $10,000 in a project and expecting a 5% return on this investment each year for 10 years. Assuming annual coumpound interest [or rate of return) what is the future value of your investment.

a/ 10000
b/ 10500
c/ 16289
d/ 19500

Thanks for providing the question Farid!

The question is referring to “return on investment” which is a financial management technique under the “Project Cost Management” area (chapter 7 in PMBOK 5th edition). The formula is:
fv=pv*(1+r)^n or future value=present value*(1+rate)^number of years

From questions:
present value=10,000
rate=.05
number of years=10

fv=10,000*(1+.05)^10=16,289

So I get “c” as the answer. This tells you what the value of your investment will be in 10 years at this rate.

Hope this helps!

Thank you for the explanation!

C OPTION