Answer: the value of this investment after 20 years is $112295.2
Step-by-step explanation:
We would apply the formula for determining future value involving deposits at constant intervals. It is expressed as
S = R[{(1 + r)^n - 1)}/r][1 + r]
Where
S represents the future value of the investment.
R represents the regular payments made(could be weekly, monthly)
r = represents interest rate/number of interval payments.
n represents the total number of payments made.
From the information given,
Since there are 12 months in a year, then
r = 0.066/12 = 0.0055
n = 12 × 20 = 240
R = $225
Therefore,
S = 225[{(1 + 0.0055)^240 - 1)}/0.0055][1 + 0.0055]
S = 225[{(1.0055)^240 - 1)}/0.0055][1.0055]
S = 225[{(3.73 - 1)}/0.0055][1.0055]
S = 225[{(2.73)}/0.0055][1.0055]
S = 225[496.36][1.0055]
S = $112295.2
