Question

If you invest a one-time lump sum of $28,000 into a mutual fund that will average 12% compounded monthly, how much will you have in 35 years? Pick the closest value.

Answer 1

$1,828,669

Explanation:

For the original lump sum of $28,000 is our principal, P, the annual interest rate r, compounded monthly for n=12 months throughout a period of 35 years (t) will have a final Accrued Amount of investment A given by the formula:

A= (Principal + Interest) = P(1 + r/n)^nt =28000(1+0.12/12)^35*12

=28000(1.01)^420=

28000*65.3096= $1828669