You are going to invest 1000 at the end of each month for 20

You are going to invest $1,000 at the end of each month for 20 years. The annual interest rate is 4% and interest will compound monthly. How much will your investment be worth at the end of 20 years? Round your answer to the nearest whole dollar and enter it in the space below as a positive value. Enter only numbers and a comma if the number is larger than three digits (e.g. 1,300), do NoT enter a dollar sign, minus sign, or decimal. ab

Solution

Solution 1:

Monthly investment = $1,000

Period = 20 years = 240 monthly periods

Annual interest rate = 4%, 0.3333% monthly rate of interest

Future value after 20 years = $1,000 * Cumulative FV factor for 240 periods at 0.333333%

= $1,000 * 366.77462 = $366,775

Solution 2:

Investment amount (P) = $4,000

Interest rate (i) = 6%, 3% semi annual

Period (n) = 20 years, 40 Semiannual period

Future value of investment = P (1+i)^n

= $4,000 (1+0.03)^40

= $4,000 * 3.262038

= $13,048