Question

If you deposit $3,600 today into an account earning a(n) 8 percent annual rate of return, what will your account be worth in 40 years (assuming no further deposits)? In 50 years? Click on the table icon to view the FVIF table In 40 years, your account will be worth (Round to the nearest cent.)

Answer 1

Answer a.

Amount invested = $3,600
Rate of return = 8%
Period = 40 years

Future value = Amount invested * FVIF (i%, n)
Future value = $3,600 * FVIF(8%, 40)
Future value = $3,600 * 21.72452
Future value = $78,208.27

In 40 years, your account will be worth $78,208.27

Answer b.

Amount invested = $3,600
Rate of return = 8%
Period = 50 years

Future value = Amount invested * FVIF (i%, n)
Future value = $3,600 * FVIF(8%, 50)
Future value = $3,600 * 46.90161
Future value = $168,845.80

In 50 years, your account will be worth $168,845.80