SOLUTION: Deposits of ​$250 per month are put into an investment plan that pays an APR of
4.2​%. How much money will be in the plan after 25 ​years?
Algebra ->
Decimal-numbers
-> SOLUTION: Deposits of ​$250 per month are put into an investment plan that pays an APR of
4.2​%. How much money will be in the plan after 25 ​years?
Log On
Question 1125488: Deposits of $250 per month are put into an investment plan that pays an APR of
4.2%. How much money will be in the plan after 25 years? Found 2 solutions by Boreal, ikleyn:Answer by Boreal(15235) (Show Source):
You can put this solution on YOUR website! FV=250[(1+.042/12)^300-1] divided by 0.042/12
=250*1.852/.0035 but don't round until the end
$132,315.51
It is a classic Ordinary Annuity saving plan. The general formula is
FV = , (1)
where FV is the future value of the account; P is your monthly payment (deposit); r is the monthly percentage yield presented as a decimal;
n is the number of deposits (= the number of years multiplied by 12, in this case).
Under the given conditions, P = 250; r = 0.042/12; n = 12*25 = 300. So, according to the formula (1), you get at the end of the 25-th year
FV = = = $132,315.51.
Note that you deposit only 12*25*$250 = $75,000. The rest is what the account earns/accumulates in 25 years.
