Question

Suppose you will invest $100 per month at the beginning of the month for 40 years with interest rate

Answer 1

Answer:

future value = 232369.1361

return % = 384.10 %

Explanation:

given data

principal = $100 per month

time = 40 year = 480 months

rate = 6.25 % yearly = 0.0625 yearly = 0.005208 monthly

to find out

total amount of capital at the end of your investment and percentage is  your total return

solution

so here future value formula is

future value = P $\frac{(1+r)^{t-1}}{r} * (1+r)$   ..........1

here r is rate and t is time and P is principal

so put all value

future value = 100 $\frac{(1+0.005208)^{480-1}}{0.005208} * (1+0.005208)$

future value = 232369.1361

so

Total capital at the end of investment-Total principle invested over the years

232369.1361 - 100 ( 12 × 40 )

184369.1361

so

Return % = $\frac{184369.1361}{48000}$ × 100

return % = 384.10 %