If you invest $1,200 each year for the next 12 years at a rate of 4.25%,...

Question

Question

If you invest $1,200 each year for the next 12 years at a rate of 4.25%, compounded monthly, what will be the future value of this investment?

business finance

Answer 1

Answer #1

We use the formula:
A=P(1+r/1200)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$1200(1+0.0425/12)^(12*11)+$1200(1+0.0425/12)^(12*10)+$1200(1+0.0425/12)^(12*9)+.............+$1200(1+0.0425/12)^(12*1)+$1200

=$1200[(1+0.0425/12)^(12*11)+(1+0.0425/12)^(12*10)+(1+0.0425/12)^(12*9)+.............+(1+0.0425/12)^12+1]

=$1200*15.31671492

which is equal to

=$18380.06(Approx).

Answer 2

Similar Homework Help Questions

12. You plan to invest $20,000 per year for 10 years and $35,000 per year for...

12. You plan to invest $20,000 per year for 10 years and $35,000 per year for the next 10 years. What is the future value of this 20-year investment Use the 10% discount rate.
1. Meagan invests $1,200 each year in an IRA for 12 years in an account that...

1. Meagan invests $1,200 each year in an IRA for 12 years in an account that earned 5% compounded annually. At the end of 12 years, she stopped making payments to the account, but continued to invest her accumulated amount at 5% compounded annually for the next 11 years. a. [3 pts] What was the value of the IRA at the end of 12 years? b. [2 pt] What was the value of the investment at the end of the...
1. Meagan invests $1,200 each year in an IRA for 12 years in an account that...

1. Meagan invests $1,200 each year in an IRA for 12 years in an account that earned 5% compounded annually. At the end of 12 years, she stopped making payments to the account, but continued to invest her accumulated amount at 5% compounded annually for the next 11 years. a. [3 pts] What was the value of the IRA at the end of 12 years? Formula 1 Work* 1.5 I Answef 0.5 b. [2 pts] What was the value of...

If you receive $15,000 today and can invest it at a 4.25% annual rate compounded continuously,...

If you receive $15,000 today and can invest it at a 4.25% annual rate compounded continuously, what will be your ending value after 20 years? a. $41,060.80 b. $43,517.43 c. $35,094.70 d. $28,426.71
How much do you need to invest in equal annual amounts for the next 10 years...

How much do you need to invest in equal annual amounts for the next 10 years (year 1 thru 10) if you want to withdraw $5,000 at the end of the eleventh year and increase the annual withdrawal by $1,000 each year thereafter until year 25 (your last withdrawal is year 25)? The interest rate is 12%, compounded monthly.
You invest $ 2,000 at the end of each year for the next 3 years. Calculate...

You invest $ 2,000 at the end of each year for the next 3 years. Calculate the value of the investment at the end of 3 years assuming you earn 6% interest. Please use the table provided under the EC Time Value of Money Module otherwise you may be marked wrong due to rounding.

Pedro Gonzalez will invest $13,000 at the beginning of each year for the next 15 years....

Pedro Gonzalez will invest $13,000 at the beginning of each year for the next 15 years. The interest rate is 8 percent. What is the future value? Use Appendix C to calculate the answer. Multiple Choice $372,248. $352,976. O $381,212. $381,212. o $394,212. $394,212.
If an IRA is a variable-rate investment for 25 years at rate r percent per year, compounded month...

If an IRA is a variable-rate investment for 25 years at rate r percent per year, compounded monthly, then the future value S that accumulates from an initial investment of $1000 is s = 100011 + 0.01r]300 12 What is the rate of change of S with respect to r and what does it tell us if the interest rate is as follows? (Round your answers to two decimal places.) (a) 6% If we were to increase the rate by...
You invest $20 at the end of each year for the next 6 years at the...

You invest $20 at the end of each year for the next 6 years at the annual rate of 9%. What percentage of total interest is due to simple interest?

12) Solve the following two cases (the cases are independent). a.If you invest $5,000 today at...

12) Solve the following two cases (the cases are independent). a.If you invest $5,000 today at 10% interest, what is the value of the investment at the end of 5 years? b.If you invest $1,200 at the end of each of the next 5 years and the investment earns 10% interest, what is the value of the investment at the end of 5 years?