SOLUTION: Tom, a graduate student, is considering investing $500 now, when he is 23, or waiting until he is 40 to invest $500. How much more money will he have at the age of 65 if he invest

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Question 170114: Tom, a graduate student, is considering investing $500 now, when he is 23, or waiting until he is 40 to invest $500. How much more money will he have at the age of 65 if he invests now given that he can earn 5% interest compounded quarterly?
Answer by jojo14344(1513) About Me  (Show Source):
You can put this solution on YOUR website!

Working eqn -----> F=P%281%2B%28i%2Fm%29%29%5E%28mn%29
Where--->system%28F=FutureValue%2CP=Principal%2Ci=interest%2Cn=years%2Cm=CompundedPerYear%29
*Note: n=65-23=42yrs
Then,Investing now @ 23 years old:
F=500%281%2B%280.05%2F4%29%29%5E%284%2A42%29
F=500%281.0125%29%5E168
F=500%288.0605626%29
F=4030.28
Investing @ 40 years old:
n=65-40=25years
F=500%281%2B%280.05%2F4%29%29%5E%284%2A25%29
F=500%281.0125%5E100%29
F=500%283.4634043%29
F=1731.70
Therefore, amount of money he will have more then ---> 4030.28-1731.7=highlight%282298.58%29, Answer
.
Thank you,
Jojo