Hi im unsure how do this problem becasue I do not how to go about these types of problems were you make monthely payments each month of the same amount...
Janene contributes $50 per month inot the Chaing China Bond Fund htat earns 7.26% annual intrerest. What is the value of Hanene's investment after 25 years (assuming that Mr. Chiang has not skipped twon with her dough?)
I don't even know what formula to use...
To solve this problem, you can use the future value of an ordinary annuity formula. An ordinary annuity is a series of equal payments made at the end of each time period.
The formula to calculate the future value of an ordinary annuity is:
FV = PMT * ((1 + r)^n - 1) / r
Where:
FV is the future value of the investment
PMT is the monthly payment amount
r is the monthly interest rate (annual interest rate divided by 12)
n is the number of time periods (in this case, 25 years multiplied by 12 months)
In this case, Janene contributes $50 per month, so PMT = $50. The annual interest rate is given as 7.26%, so the monthly interest rate (r) would be (7.26% / 12) = 0.605%. The investment period is 25 years, which is equivalent to 25 * 12 = 300 months (n).
Now let's calculate the future value of Janene's investment using the formula:
FV = 50 * ((1 + 0.00605)^300 - 1) / 0.00605
To simplify this calculation, you can use a financial calculator, a spreadsheet software, or an online future value calculator that handles annuities. These tools can directly provide the output, which is the value of Janene's investment after 25 years.
Using the formula or a calculator, you should find that the value of Janene's investment after 25 years will be $50,727.81 (rounded to the nearest cent).