Question
Asked Oct 27, 2019
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What would my total be earning 5% compounded monthly for
12 years after that (without any additional deposits) on $3,990,436.14?

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Expert Answer

Step 1

Future value can be defined as the future worth of specified present amount at a future date at given interest rate.

It is given that,

Present value is $3,990,436.14.

Interest rate is 5% compounded monthly. So, interest rate per month will be (0.05 ÷ 12) = 0.004167.

Number of years is 12. So, total number of months will be 12 × 12 =144.

Step 2

The formula to calculate future value is given below:

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Future value Present value x (1+i Here, i is interest rate is number of periods

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Step 3

Substitute $3,990,436.14 for present value, 0.004...

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Future value $3,990, 436.14 x (1+ 0.004167)* = $3,990,436.14 x 1 .8 19848 = $ 7, 261,990.71

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