Value of plan after 50 years is $
18,55,620.43
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We can also say that question says that $ 260 per month is
contributed for 50 years and additional $ 260 per month for next 30
years. |
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Step-1:Future value of $ 260 monthly contribution for 50 years |
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Future value |
= |
Monthly contribution |
* |
Future
value of annuity of 1 |
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= |
$Â Â Â Â Â Â Â Â Â Â Â Â Â
260.00 |
* |
5867.776224 |
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= |
$
15,25,621.82 |
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Working: |
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Future value of annuity of 1 |
= |
(((1+i)^n)-1)/i |
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Where, |
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= |
(((1+0.006)^600)-1)/0.006 |
i |
= |
7.2%/12 |
= |
0.006 |
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= |
5867.776224 |
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n |
= |
50*12 |
= |
600 |
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Step-2:Future value of $ 260 monthly contribution for 30 years |
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Future value |
= |
Monthly contribution |
* |
Future
value of annuity of 1 |
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= |
$Â Â Â Â Â Â Â Â Â Â Â Â Â
260.00 |
* |
1269.225442 |
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= |
$Â Â Â 3,29,998.61 |
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Working: |
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Future value of annuity of 1 |
= |
(((1+i)^n)-1)/i |
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Where, |
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= |
(((1+0.006)^360)-1)/0.006 |
i |
= |
7.2%/12 |
= |
0.006 |
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= |
1269.225442 |
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n |
= |
30*12 |
= |
360 |
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Step-3:Calculation of future value after the 50 years |
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Future value after 50 years |
= |
$
15,25,621.82 |
+ |
$
3,29,998.61 |
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= |
$
18,55,620.43 |
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