You plan to invest $350 in a growth fund that has a rate of 1.5% compounded quarterly.
How much money will this investment be worth after 50 years?
To calculate the future value of the investment after 50 years, we can use the formula for compound interest:
Future Value = Principal Amount * (1 + (Rate / n))^(n * Time)
Given:
Principal Amount = $350
Rate = 1.5% (convert to decimal form: 0.015)
Compound Period (n) = 4 (compounded quarterly)
Time = 50 years
Let's plug in these values and calculate the future value:
Future Value = 350 * (1 + (0.015 / 4))^(4 * 50)
Step 1: Calculate the value inside the parentheses:
(0.015 / 4) = 0.00375
Step 2: Calculate the exponent:
4 * 50 = 200
Step 3: Raise the value inside the parentheses to the power of the exponent:
(1 + 0.00375)^200 = 2.82540179
Step 4: Multiply the principal amount by the result:
350 * 2.82540179 = $988.24
Therefore, after 50 years, the investment will be worth approximately $988.24.