SOLUTION: Suppose you invest $50 a month for 5 years into an account earning 8% compounded monthly. After 5 years, you leave the money, without making additional deposits, in the account

Algebra ->  Finance -> SOLUTION: Suppose you invest $50 a month for 5 years into an account earning 8% compounded monthly. After 5 years, you leave the money, without making additional deposits, in the account       Log On


   

Question 1165914: Suppose you invest $50 a month for 5 years into an account earning 8% compounded monthly.
After 5 years, you leave the money, without making additional deposits, in the
account for another 25 years. How much will you have in the end?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
use the online financial calculator at https://arachnoid.com/finance/index.html


first you want to find the future value of the 50 dollar a month investments at 8% compounded monthly.

your inputs to this calculator are:

pv = 0
fv = 0
np = 5 years * 12 months per year = 60 months.
pmt = -50 (negative because it's money going out).
ir = 8% / 12 = .666666666666% (the calculator will round to the number of digits it wants to display).
select investments at the end of each month.

select fv and the calculator tells you that the future value of the investments is $3,673.84 (positive because it's money coming in).



you use the calculator again with the following inputs.

pv = -3673.84 (negative because it's money going out).
fv = 0
np = 25 years * 12 months per year = 300 months.
pmt = 0
ir = 8% / 12 = .666666666666% (founded to number of digits displayed).
investments at the end or beginning of each month is not used so it doesn't make a difference what you select in this analysis.

select fv and the calculator tells you that the future value of the investments is $26,966.66



that's how much you'll have at the end of the investment period.

the calculator used can be found at https://arachnoid.com/finance/index.html