joe will retire in 30 years. he will invest $200 each month for 20 years and then let the accumulated value continue to grow for the next 10 years. he earns 5% interest, compounded monthly. HOw much will be available at retirement?
First: to calculate the amount after 20 years: A = p[ (1 + r)n - 1 ] / r
Where p = amount invested each month: 200
r = percentage rate per month: .05/12
n = number of months = 20 x 12 = 240
A = 200[ (1 + .05/12)240 - 1 ] / (.05/12) = 130,206.73
Second: to calculate that value after 10 years: A = p(1 + r)n
Where p and r are the same as above and n = 10 x 12 = 120
A = 130 206.73(1 + .05/12)120 = 214,451.73
First: to calculate the amount after 20 years: A = p[ (1 + r)n - 1 ] / r
Where p = amount invested each month: 200
r = percentage rate per month: .05/12
n = number of months = 20 x 12 = 240
A = 200[ (1 + .05/12)240 - 1 ] / (.05/12) = 130,206.73
Second: to calculate that value after 10 years: A = p(1 + r)n
Where p and r are the same as above and n = 10 x 12 = 120
A = 130 206.73(1 + .05/12)120 = 214,451.73