Question

Steve is considering investing $3,600 a year for 40 years. how much will this investment be worth at the end of the 40 years if he earns an average annual rate of return of 11.6 percent? assume steve invests his first payment of the end of this year.

Answer 1

Using the future value of an annuity formula, Steve can calculate the total value of his $3,600 annual investment over 40 years with an 11.6% rate of return.

Step-by-step explanation:

Steve is considering investing $3,600 annually for 40 years at an average annual rate of return of 11.6%. We will use the future value of an annuity formula to calculate the total value of this investment at the end of 40 years. The formula for the future value of an annuity is as follows:

FV = Pmt × { [(1 + r)^n - 1] / r }

Where:
FV = Future Value of the annuity
Pmt = Payment per period
r = Interest rate per period
n = Number of periods

Here, Pmt = $3,600, r = 11.6% or 0.116, and n = 40. Substituting these values into the formula, we get:

FV = $3,600 × { [(1 + 0.116)^40 - 1] / 0.116 }

Calculating this will give us the future value of Steve's investment, assuming that he makes his first payment at the end of this year and continues to invest at the end of each subsequent year for 40 years.

Answer 2

A=3,600×((1.116)^(40)−1)÷0.116)
A=2,471,685.698