Steve is considering investing $3,600 a year for 40 years.How much will this investment be worth at the end of the 40 years if he earns an average annual rate of return of 11.6 percent? Assume Steve invests his first payment of the end of this year.

Question

Quizplus · Accepted Answer

The future value of an annuity formula is used to calculate the investment's worth: FV = P * [((1 + r)^n - 1) / r], where P is the annual payment ($3,600), r is the annual interest rate (11.6% or 0.116), and n is the number of years (40). Plugging in these values gives the future value closest to $2,471,685.70.

Steve Is Considering Investing $3,600 a Year for 40 Years