Question

You put $125.32 at the end of each month in an investment plan that pays 2.5% interest, compounded monthly. How much will you have after 23 years? Round to the nearest cent. a. $46,683.28 b. $4,564,471.88 c. $2,949.39 d. $3,832.84

Answer 1

you will have $46,683.28 after 23 years.

Step-by-step explanation:

You put $125.32 at the end of each month for 23 years at the rate of 2.5% interest.

Formula : $FY=pmt[\frac{(1+\frac{r}{n})^{nt}-1}{\frac{r}{n}}]$

FY = Future Value after 23 years

pmt = per month investment = $125.32

r = rate of interest = 2.5% =  0.025

t = time = 23 years

n = monthly compounding = 12

Now put the values into formula :

$FY=125.32[\frac{(1+\frac{0.025}{12})^{(12)(23)}-1}{\frac{0.025}{12}}]$

$=125.32(\frac{(1+0.002083)^{276}-1}{0.002083})$

$=125.32(\frac{(1.002083)^{276}-1}{0.002083})$

$=125.32(\frac{1.77605159-1}{0.002083})$

$=125.32(\frac{0.77605159}{0.002083})$

= 125.32 × 372.512589

= $46,683.277 ≈ $46,683.28

Option a. you will have $46,683.28 after 23 years.

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