Question

Consider making an investment of $8,200 each year. If the first $8,200 investment is made at the end of this year, how much will you have in:

a. 9 years at 7 percent?


b. 25 years at 13 percent?

Answer 1

a) you can expect to have approximately $15,075.37 in your investment after 9 years at 7% interest. b) you can expect to have a significantly higher amount of approximately $174,090.45 in your investment after 25 years at 13% interest.

a. 9 years at 7 percent:

To calculate the future value with compound interest, we can use the formula:

F =
`P * (1 + r)^n`

Plugging in the values:

F = $8,200 *
`(1 + 0.07)^9`

F ≈ $15,075.37

Therefore, you can expect to have approximately $15,075.37 in your investment after 9 years at 7% interest.

b. 25 years at 13 percent:

Using the same formula with the adjusted interest rate and timeframe:

F = $8,200 *
`(1 + 0.13)^(25)`

F ≈ $174,090.45

Therefore, you can expect to have a significantly higher amount of approximately $174,090.45 in your investment after 25 years at 13% interest.