Final answer:
The future value of the $700 investment at 8.5% interest for 40 years is approximately $6,430.
Step-by-step explanation:
To calculate the future value of an investment with compound interest, we can use the formula:
FV = PV × (1 + r)^n
Where:
- FV is the future value
- PV is the initial principal (amount invested)
- r is the interest rate per period (expressed as a decimal)
- n is the number of periods
In this case, the initial principal is $700, the interest rate is 8.5%, and the number of periods is 40 years. Plugging in these values into the formula:
FV = 700 × (1 + 0.085)^40
Using a calculator or spreadsheet, the future value is approximately $6,430.08. Rounding to the nearest dollar, the final amount is $6,430.