Question

Use the savings plan formula to answer the following question You put $400 per month in an investment plan that pays an APR of 6.5%. How much money will you have after 25 years? Compare this amount to the total deposits made over the time period. After 25 years the investment plan will contains (Do not round until the final answer. Then round to the nearest cent as needed)

Answer 1

$A = P\left [ \frac{\left ( 1+\frac{r}{n} \right )^{nt}-1}{\frac{r}{n}} \right ]$

P = 400

APR = r = 6.5/100 = 0.065

n = 12

t = 25

nt = 300

$A = 400\left [ \frac{\left ( 1+\frac{0.065}{12} \right )^{300}-1}{\frac{0.065}{12}} \right ]$

A = 299534.61