SOLUTION: You invest $250 in your savings account at the end of each year and earn an avaerage of 6% per year in interest. How much will you have in your savings at the end of forty years?

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Question 121460: You invest $250 in your savings account at the end of each year and earn an avaerage of 6% per year in interest. How much will you have in your savings at the end of forty years?
Answer by Fombitz(32388) About Me  (Show Source):
You can put this solution on YOUR website!
This is a future value of an oridinary annuity problem.
The formula is
FV=PMT%28%28%281%2Bi%29%5En-1%29%2Fi%29
where
FV is the future value (what you're looking for)
PMT is the payment made during the period ($250)
n is the total number of periods (40 years)
i is the period interest rate (6% per year)
FV=PMT%28%28%281%2Bi%29%5En-1%29%2Fi%29
FV=250%28%28%281%2B.06%29%5E40-1%29%2F.06%29
FV=250%28%28%281.06%29%5E40-1%29%2F.06%29
FV=250%28%2810.2857-1%29%2F.06%29
FV=250%289.2857%2F.06%29
FV=250%28154.762%29
FV=38690.49%29
The future value would be $38690.49.