Final answer:
To calculate how much you will have in the account in 35 years, the future value of an annuity compound interest formula is used with the monthly deposit, annual interest rate, and period in years.
Step-by-step explanation:
The question revolves around the concept of compound interest, specifically with monthly contributions to an account over a 35-year period. To determine the final amount in the account, we apply the future value of an annuity formula that calculates the total value of a series of payments at a given interest rate, compounded over time.
To calculate the total amount, the formula for the future value of an annuity compounded monthly is:
FV = P × ((1 + r/n)^(nt) - 1) / (r/n)
where:
- FV is the future value of the annuity
- P is the monthly payment ($500)
- r is the annual interest rate (8% or 0.08)
- n is the number of times interest is compounded per year (12 for monthly)
- t is the number of years the money is invested (35)
By substituting the values into the formula, you will calculate the final amount in the account after 35 years. Calculation of the future value of the annuity may require a financial calculator or software that can handle these formulas.