Value of $40000 compounded at 5% annually for 35 years
To calculate the future value of an investment compounded annually, you can use the compound interest formula:
Future Value = Principal × (1 + Interest Rate)^Number of Periods
For your example, the principal (initial investment) is $40,000, the interest rate is 5% (or 0.05 as a decimal), and the number of periods is 35 years.
Plugging these values into the formula, we get:
Future Value = $40,000 × (1 + 0.05)^35
Now, let's calculate it step by step:
1. Add 1 to the interest rate: 1 + 0.05 = 1.05
2. Raise this value to the power of the number of periods: 1.05^35 ≈ 4.32194
3. Multiply the result by the principal: $40,000 × 4.32194 ≈ $172,877.60
Therefore, the future value of $40,000 compounded at 5% annually for 35 years is approximately $172,877.60.