Question

As a young professional in the future, it is good to start saving money to have a

security for the future and have something to use when emergency cases happen
related to the need of cash. The Philippine Average Family income last 2015 was
around P276,000 per year. Lets say every year you earn the same amount and save
P76,000 yearly in your frusted bank giving 4% compounded interest annually. How much
will the account worth in the future after 40 years?
a. Solve for the future value of the account:
FV=PMT
( \frac{(1 + i) ^{n} - 1 }{i} )(i(1+i)n−1​)
​

Answer 1

Explanation:

We would apply the future value which is expressed as

FV = C × [{(1 + r)^n - 1}/r]

Where

C represents the yearly payments of the young professional.

FV represents the amount of money

in your account at the end of 40 years.

r represents the annual rate.

n represents number of years or period.

From the information given,

r = 4% = 4/100 = 0.04

C = $76000

n = 40 years

Therefore,

FV = 76000 × [{(1 + 0.04)^40 - 1}/0.04]

FV = 76000 × [{4.8 - 1}/0.04]

FV = 76000 × 95

FV = P7220000