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julsineya [31]
3 years ago
11

Leon and Heidi decided to invest ​$3,500 annually for only the first seven years of their marriage. The first payment was made a

t age 20. If the annual interest rate is 9​%, how much accumulated interest and principal will they have at age 70​?
Business
1 answer:
raketka [301]3 years ago
8 0

Answer:

FV= $1,309,832.57

Explanation:

Giving the following information:

Annual investment (1 to 7)= $3,500

Interest rate= 9%

<u>First, we need to calculate the future value of the annual deposit using the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {3,500*[(1.09^7) - 1]} / 0.09

FV= $32,201.52

<u>Now, the value when they are 70:</u>

Number of periods= 70 - 27= 43

FV= PV*(1+i)^n

FV= 32,201.52*(1.09^43)

FV= $1,309,832.57

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