SOLUTION: Future Value of an Annuity:
I invest $50 a month in a 401k. Assuming an annual rate of return of 9%, how much will this fund be worth if retiring in 40 years?
My problem in try
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Question 754985: Future Value of an Annuity:
I invest $50 a month in a 401k. Assuming an annual rate of return of 9%, how much will this fund be worth if retiring in 40 years?
My problem in trying to figure this out is dividing the 9% rate out monthly.
Answer by MathTherapy(10556) (Show Source): You can put this solution on YOUR website!
I invest $50 a month in a 401k. Assuming an annual rate of return of 9%, how much will this fund be worth if retiring in 40 years?
My problem in trying to figure this out is dividing the 9% rate out monthly.
The easiest method is to apply the formula for the future value of an ordinary annuity, which is: , with:
being future value of an ordinary annuity
being payment, which in this case is $50
being interest rate, or .09 in this case
being the amount of compounding periods, per year (12 in this case since payments would be monthly)
being time, in years (40 in this case)
With that you'll have a total of $ in 40 years.
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