SOLUTION: Suppose you invest $140 a month for 4 years into an account earning 6% compounded monthly. After 4 years, you leave the money, without making additional deposits, in the account fo

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Question 1155715: Suppose you invest $140 a month for 4 years into an account earning 6% compounded monthly. After 4 years, you leave the money, without making additional deposits, in the account for another 29 years. How mich will you have in the end?
Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website!
use of a financial calculator gives you the answer to this.
you would first take the future value of an annuity for 4 years.
the future value becomes your present value for the next 29 years where you take the future value of a present value, using the same calculator.
one such calculator is the TI-BA-II Business Analyst, made by texas instruments.
for the first part, you make the following inputs.
present value = 0
future value = 0
interest rate percent per year = 6% divided by 12 = .5% per month.
number of years = 4 multiplied by 12 = 48 months.
payments are made at the end of each month.
you have the calculator compute the future value.
it is equal to 7,573.69651.
that becomes the present value for the next round of financial calculations.
your inputs to the calculator becomes:
present value = 7,573.69651.
future value = 0
interest rate per month = .5%
number of months = 29 years * 12 = 348
you have the calculator compute the future value.
it is equal to 42,963.27602
i did the year by year calculations in excel.
the results are the same and are shown below.