Roger spends $60 per month on beer and $60 per month on cigarettes. He is going to quit smoking and cut his beer expense in half by making his own beer at the local U-Brew. At the end of every month the money he saves is going to go into an investment plan earning 12% compounded monthly. How much money should he have after 40 years?
A) $250,560
B) $443,946
C) $892,605
D) $1,058,830
E) $1,411,772

Question

Quizplus · Accepted Answer

Roger saves $60 from quitting smoking and $30 from cutting his beer expense, totaling $90 saved per month. Using the future value of an annuity formula for monthly compounding, FV = P * [(1 + r)^nt - 1] / r, where P = $90, r = 0.12/12, n = 12, and t = 40, the future value is approximately $1,058,830.

Roger Spends $60 Per Month on Beer and $60 Per