Question

CAN YOU PLEASE SHOW ME HOW!

You invest $5,000 per year for 25 years at 9%.

How much will you have at the end of the 25 years? ($423,504.48) What if you invest monthly ($5,000/12) instead of annually? ($467,134.14)

Answer 1

Annual rate or r 9%; n or nper 25yrs; annuity per year 5000

Future value of Ordinary Annuity formula = annuities* (((1+r)^n)-1) / r

5000 * (((1.09)^25) -1) / 0.09)

5000 * (8.62308066) -1) / 0.09)

5000 * (7.62308066/ 0.09)

5000 * 84.70089623

423504.48

or

You can use the FV function in excel

FV(Rate, NPER, PMT, PV, Type)

rate 9%;NPER 25;PMT 5000;

FV(9%,25,5000)

$423,504.48

Monthly rate or r 9%/ 12 = 0.0075 ; n or nper 25yrs *12months = 300; annuity per year 5000/12 = 416.66667

Future value of Ordinary Annuity formula = annuities* (((1+r)^n)-1) / r

416.66667 * (((1.0075)^300) -1) / 0.0075)

416.66667 * (9.4084145298) -1) / 0.0075)

416.66667 * (8.4084145298/ 0.0075)

416.66667 * 1121.12193731785

467134.14

or

You can use the FV function in excel

FV(Rate, NPER, PMT, PV, Type)

rate 9%;NPER 25;PMT 5000;

FV(9%/12,300,5000/12)

$467,134.14