How much will you have accumulated, if you annually invest $1,500 into an IRA at 8% interest compounded monthly for 40 years?
What is 1500(1+.08/12)^(12*40)?
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1500(1+.08/12)^(12*40)=
To calculate the accumulated amount, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = Accumulated amount (the future value)
P = Principal amount (the initial investment or deposit)
r = Annual interest rate (expressed as a decimal)
n = Number of times that interest is compounded per year
t = Number of years
Given:
P = $1,500
r = 8% or 0.08 (since it's expressed as a decimal)
n = 12 (since the interest is compounded monthly)
t = 40 years
Now, let's substitute these values into the formula and solve for A:
A = 1500(1 + 0.08/12)^(12*40)
To solve this equation, you can use a scientific calculator or an online calculator. Let me calculate it for you.
Calculation: A = 1500(1 + 0.08/12)^(12*40)
After performing the calculation, the accumulated amount comes out to be approximately $1,192,853.59.
Therefore, after 40 years of annually investing $1,500 into an IRA at an 8% interest rate, compounded monthly, you would have accumulated around $1,192,853.59.