Question

You plan to save $200 a month for the next 24 years and hope to earn an average rate of return of 10.6 percent. How much more will you have at the end of the 24 years if you invest your money at the beginning rather than the end of each month?

Answer 1

Answer:

$7.278×10^14

Explanation:

A = P(1+r)^n

P = $200, r = 10.6% = 0.106

If the money is invested at the beginning of each month, there would be 12 months in a year for me to invest.

Therefore, n = 24×12 = 288 months

A = 200(1+0.106)^288 = $7.99×10^14

If the money is invested at the end of each month, there would be 11 months for me to invest

Therefore, n = 24×11 = 264 months

A = 200(1+0.106)^264 = $7.12×10^13

Additional amount = $7.99×10^14 - $7.12×10^13 = $7.278×10^14