Assume that you deposit $1,104 into an account that pays 7 percent per annum. How much money would be in the account 27 years from today? (
To calculate the future value of the account after 27 years, we can use the compound interest formula:
FV = PV * (1 + r)^n
Where:
FV = Future Value of the account
PV = Present Value (initial deposit)
r = Interest rate per period (in this case, 7 percent or 0.07)
n = Number of compounding periods (in this case, 27 years)
Given that the initial deposit (PV) is $1,104, the interest rate per annum (r) is 7 percent or 0.07, and the number of years (n) is 27, we can substitute these values into the formula:
FV = $1,104 * (1 + 0.07)^27
Now, let's solve this equation:
FV = $1,104 * (1.07)^27
Using a calculator or software, we can calculate the future value:
FV ≈ $4,538.10
Therefore, after 27 years, the account would have approximately $4,538.10.