Question

Dane is investing $150,000 for 30 years at an annually compounded rate of 5.5%. What is the difference between his ending account balance if he finds an investment that offers 6.5% instead?

Answer 1

Total = Principal × ( 1 + Rate )^years
Total = 150,000 * (1.055) ^ 30
Total = 150,000 * 4.9839512884
Total = 747,592.69

Total = 150,000 * (1.065) ^ 30
Total = 150,000 * 6.614366163
Total = 992,154.92

Difference = 992,154.92 -747,592.69 =
244,562.23

Source:
http://www.1728.org/compint.htm
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