Carlos Menendez is planning to invest $3,500 every year for the next six years in an investment paying 12 percent annually. What will be the amount he will have at the end of the six years?

Carlos Menendez is planning to invest $3,500 every year for the next six years in an investment paying 12 percent annually. Using the power of compounding, we can calculate the amount he will have at the end of this period by first determining the present value of his total investments. This can be done by taking each year’s payments and discounting them back to today’s dollar value using a rate that reflects the time-value of money (i.e., 12%). By doing so, we find that over these 6 years Carlos has invested a total of $21,000.

Now if we assume no withdrawals are made during this period and instead all funds remain invested at an interest rate of 12%, then after 6 years he would have accumulated approximately $48,392. This calculation is based on simple interest – i.e., not factoring in any reinvestment or compounding effects which could increase returns even further; however given that Carlos is only investing once per year this should not affect his ending balance significantly as there are few opportunities for capital appreciation due to limited reinvestment opportunities.

Nevertheless though it is evident from this analysis that Carlos’ decision to invest consistently over a longer term period will pay off quite handsomely; with just under $50k after 6 years this strategy should provide a solid return on his initial outlay while also helping him benefit from tax deferral advantages associated with retirements savings accounts like 401ks or IRAs.