Question

How much invested today will grow in the same amount of money in 25 years that...

How much invested today will grow in the same amount of money in 25 years that $500 invested at the end of each year for the next 25 years will grow into given the annual rate of 6%?

Homework Answers

Answer #1

First we will use a BA 2 plus Financial calculator to calculate the Future value of our periodic investments of $500-

N(Number of years) = 25

PMT(Investment per period) = $500

I/Y(Interest rate) = 6%

CMPT FV

Amount accumulated after 25 years = $27,432.256

To calculate the amount of investment to be made today that will grow in the same amount of money in 25 years as $500 per year, we will calculate the PV of the Amount accumulated after 25 years

PV = $27,432.256 / (1.06^25) = $6391.678

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