You are depositing a single lump sum of $1,000 in a retirement account today and expect to carn an average return of 8 percent on this money. How much additional income will you earn if you leave the money invested for 40 years instead of just 30 years?
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The formula for future value is: $FV = PV(1 + r)^n$ Where: $FV$ = future value $PV$ = present value ($1,000) $r$ = interest rate (8% or 0.08) $n$ = number of years (30) $FV_{30} = 1000(1 + 0.08)^{30} = 1000(1.08)^{30} \approx 10062.66$ Show more…
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