to what amount will the following investment accu To what am

To what amount will the following investment accumulate? $21,625, invested today for 38 years at 15.85 percent, compounded monthly. Round the answer to two decimal places.

Solution

Answer:

Amount invested = $21,625
Period = 38 years or 456 months

Annual Interest Rate = 15.85%
Monthly Interest Rate = 1.3208%

Accumulated Sum = Amount Invested * (1 + Monthly Interest Rate)^Period
Accumulated Sum = $21,625 * (1 + 0.013208)^456
Accumulated Sum = $21,625 * 1.013208^456
Accumulated Sum = $21,625 * 396.7951
Accumulated Sum = $8,580,694.04

So, accumulated sum after 38 years is $8,580,694.04