initial deposit 4100
annual interest rate 8%
inflation 3%
30 years
To calculate the final value of an initial deposit after 30 years with an annual interest rate of 8% and inflation rate of 3%, you can follow these steps:
Step 1: Calculate the balance after each year considering the interest rate and inflation rate.
- For the initial year, the balance is the initial deposit: $4,100.
- For subsequent years, the balance can be calculated using the formula: balance = previous_balance * (1 + interest_rate - inflation_rate).
Step 2: Repeat Step 1 for 30 years to obtain the final balance.
Here's the breakdown of the calculation:
Year 1:
- Balance = $4,100 * (1 + 0.08 - 0.03) = $4,382.
Year 2:
- Balance = $4,382 * (1 + 0.08 - 0.03) = $4,702.
Year 3:
- Balance = $4,702 * (1 + 0.08 - 0.03) = $5,063.
Continuing this calculation for 30 years will give us the final balance after 30 years. You can use a spreadsheet program like Microsoft Excel or Google Sheets to easily calculate the balance for each year with a simple formula.