What will $10,000,000 be in 12 years if it earns 7% and you add $5,000 at the beginning of every month?
To calculate the future value of an investment, we can use the formula for compound interest:
FV = PV * (1 + r)^n
Where:
FV = Future Value
PV = Present Value (initial investment)
r = Interest rate per compounding period
n = Number of compounding periods
In this scenario, we need to consider two components: the initial investment of $10,000,000 and the monthly contributions of $5,000.
First, let's calculate the future value of the initial investment alone:
PV = $10,000,000
r = 7% per year = 0.07
n = 12 years
FV_initial = $10,000,000 * (1 + 0.07)^12
Next, let's calculate the future value of the monthly contributions:
PV = $5,000
r = 7% per year = 0.07
n = 12 years * 12 months/year = 144 months
FV_monthly = $5,000 * [(1 + 0.07/12)^144 - 1] / (0.07/12)
Finally, we can add the two future values to get the total future value:
FV_total = FV_initial + FV_monthly
Calculating this equation will give you the answer to your question: What will $10,000,000 be in 12 years if it earns 7% and you add $5,000 at the beginning of every month.