Question

Your friend is investing in a 401(k) that promises 2% annual growth. He plans on investing $250 each month for 25 years. Excel returns a value of $97,205.28 for the balance in the 401(k) after 25 years. How much interest is earned in the account after 30 years?

Answer 1

Answer:

$33181.35

Step-by-step explanation:

The first to do would to calculate the balance in the investment account after 30 years.

=fv(rate,nper,pmt,-pv)

rate is the rate of return per month which is 2%/12

nper is 30 years multiplied by 12

pmt is the periodic payment in the investment account of $250

pv is the current balance is shown as zero

=fv(2%/12,30*12,250,0)=$123,181.35

Total interest is the balance in the account after 30 years minus amount invested.

total interest=$123,181.35-($250*12*30)

                     =$123,181.35-$90,000.00=$33181.35