Sandler invested an average of $275 per month since age 45 in various securities for his retirement savings. His investments averaged a 2.5% annual rate of return until he retired at age 72. Given the same monthly investment and rate of return, how much more would Sandler have in his retirement savings had he started investing at age 35? Assume monthly compounding.

Question

yanasidlinskiy · Answer

You use this simple equation, you have the variables, just plug it in

  A = P(1 + r)n

    P is the principal (the initial amount you borrow or deposit)

    r is the annual rate of interest (percentage)

    n is the number of years the amount is deposited or borrowed for.

    A is the amount of money accumulated after n years, including interest.

    When the interest is compounded once a year:

anonymous · Answer

I always try this but I dont know what to do with the 1 (1+r) what is the purpose of the 1?