Answer:
Total FV= $1,220,441.33
Explanation:
First, we need to calculate the value of the $200 for 20 years. To calculate the future value, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
A= 200
n= 20*12= 240
Intertest rate= 0.07/12= 0.005833
FV= {200*[(1.005833^240) - 1]} / 0.005833
FV= $104,180.27
Now, the value of the $300 for 30 years. At the same time, the future amount of the first investment. Each one with its separate formula.
$300 monthly investment:
n= 300*12= 360
FV= {300*[(1.005833^360) - 1]} / 0.005833
FV= $365,962.41
$104,180.27 investment:
FV= PV*(1+i)^n
FV= 104,180.27*(1.005833^360)
FV= $854,478,92
Finally, the total FV:
Total FV= 854,478.92 + 365,962.41
Total FV= $1,220,441.33
