Question

Suppose you invest $150 a month for 5 years into an account earning 7% compounded monthly. After 5 years, you leave the money, without making additional deposits, in the account for another 23 years. How much will you have in the end?

Answer 1

About 0.3 billion dollars

Explanation:

5 years = 60 months.

The 150 of the first month will be 150*1.07^60 in 5 years.

The 150 of the second month will be 150*1.07^59 in 5 years.

The 150 of the third month will be 150*1.07^58 in 5 years.

And so forth.

So we sum that up:

( sum_(n=1)^(60) 150×1.07^n)

And multiply with

× 1.07^(5×23)

to account for the increase in value in the following 23 years.