Answer :
Alright, let's work through this step-by-step.
### Given:
- Monthly deposit (P): [tex]$400 - Annual interest rate (r): 5% or 0.05 - Compounding frequency (n): Monthly, which is 12 times a year - Number of years (t): 35 ### Let's break this down into the steps required to find the future value of this annuity: 1. Convert the annual interest rate to the monthly interest rate: \[ \text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{\text{Compounding Frequency}} \] \[ \text{Monthly Interest Rate} = \frac{0.05}{12} \] \[ \text{Monthly Interest Rate} = 0.004167 \] 2. Determine the total number of compounding periods: \[ \text{Total Periods} = \text{Compounding Frequency} \times \text{Number of Years} \] \[ \text{Total Periods} = 12 \times 35 \] \[ \text{Total Periods} = 420 \] 3. Use the Future Value of an Annuity formula: The formula for the future value of an annuity is: \[ \text{FV} = P \times \left( \frac{(1 + r)^{nt} - 1}{r} \right) \] Where: - \( P \) = Monthly deposit - \( r \) = Monthly interest rate - \( n \) = Compounding frequency - \( t \) = Number of years Substitute the given values into the formula: \[ \text{FV} = 400 \times \left( \frac{(1 + 0.004167)^{420} - 1}{0.004167} \right) \] 4. Calculate the expression inside the parentheses: \[ (1 + 0.004167)^{420} \] 5. Subtract 1 from the result: \[ (1 + 0.004167)^{420} - 1 \] 6. Divide by the monthly interest rate: \[ \frac{(1 + 0.004167)^{420} - 1}{0.004167} \] 7. Multiply by the monthly deposit: \[ \text{FV} = 400 \times \left( \frac{(1 + 0.004167)^{420} - 1}{0.004167} \right) \] After performing these calculations, we find that the future value (FV) is: \[ \text{FV} \approx 454436.97 \] ### Answer: In 35 years, you will have approximately $[/tex]454,436.97 in the account.
### Given:
- Monthly deposit (P): [tex]$400 - Annual interest rate (r): 5% or 0.05 - Compounding frequency (n): Monthly, which is 12 times a year - Number of years (t): 35 ### Let's break this down into the steps required to find the future value of this annuity: 1. Convert the annual interest rate to the monthly interest rate: \[ \text{Monthly Interest Rate} = \frac{\text{Annual Interest Rate}}{\text{Compounding Frequency}} \] \[ \text{Monthly Interest Rate} = \frac{0.05}{12} \] \[ \text{Monthly Interest Rate} = 0.004167 \] 2. Determine the total number of compounding periods: \[ \text{Total Periods} = \text{Compounding Frequency} \times \text{Number of Years} \] \[ \text{Total Periods} = 12 \times 35 \] \[ \text{Total Periods} = 420 \] 3. Use the Future Value of an Annuity formula: The formula for the future value of an annuity is: \[ \text{FV} = P \times \left( \frac{(1 + r)^{nt} - 1}{r} \right) \] Where: - \( P \) = Monthly deposit - \( r \) = Monthly interest rate - \( n \) = Compounding frequency - \( t \) = Number of years Substitute the given values into the formula: \[ \text{FV} = 400 \times \left( \frac{(1 + 0.004167)^{420} - 1}{0.004167} \right) \] 4. Calculate the expression inside the parentheses: \[ (1 + 0.004167)^{420} \] 5. Subtract 1 from the result: \[ (1 + 0.004167)^{420} - 1 \] 6. Divide by the monthly interest rate: \[ \frac{(1 + 0.004167)^{420} - 1}{0.004167} \] 7. Multiply by the monthly deposit: \[ \text{FV} = 400 \times \left( \frac{(1 + 0.004167)^{420} - 1}{0.004167} \right) \] After performing these calculations, we find that the future value (FV) is: \[ \text{FV} \approx 454436.97 \] ### Answer: In 35 years, you will have approximately $[/tex]454,436.97 in the account.