what is the future value of $8000 a year for 28 years at 7.5%
you take the principal multiplied by the rate by the time. That equals the interest and then you add it to the principal that is the future total
amount = 8000( 1.075)^28 = $60,607.59
I like math
To calculate the future value of an annuity, you can use the formula for the future value of a series of equal cash flows, which is:
FV = P * [(1 + r)^n - 1] / r
Where:
FV = Future Value
P = Annual payment
r = Interest rate per compounding period
n = Number of compounding periods
In this case, you have an annual payment of $8000, a time period of 28 years, and an interest rate of 7.5%. However, before using the formula, we need to convert the interest rate into its decimal form. So, 7.5% becomes 0.075.
Now let's plug in the values into the formula:
FV = 8000 * [(1 + 0.075)^28 - 1] / 0.075
To simplify the calculation, let's break it down:
Step 1: Calculate (1 + r)^n
(1 + 0.075)^28 = 3.17250253
Step 2: Calculate (1 + r)^n - 1
3.17250253 - 1 = 2.17250253
Step 3: Calculate P * [(1 + r)^n - 1]
8000 * 2.17250253 = 17380.02
Step 4: Calculate [P * [(1 + r)^n - 1] / r]
17380.02 / 0.075 = 231733.60
Therefore, the future value of $8000 a year for 28 years at 7.5% interest rate is approximately $231,733.60.