you can see this as.... you go to the bank, deposit your salary and they give you annually 3% in interest
how much will it be in 16 years?
[tex]\bf \qquad \qquad \textit{Future Value of an ordinary annuity}
\\\\
A=pymnt\left[ \cfrac{\left( 1+\frac{r}{n} \right)^{nt}-1}{\frac{r}{n}} \right]
\\\\[/tex]
[tex]\bf \begin{cases}
A=
\begin{array}{llll}
\textit{original amount}\\
\textit{already compounded}
\end{array}
\begin{array}{llll}
\end{array}\\
pymnt=\textit{periodic payments}\to &40,000\\
r=rate\to 3\%\to \frac{3}{100}\to &0.03\\
n=
\begin{array}{llll}
\textit{times it compounds per year}\\
\textit{annually, thus once}
\end{array}\to &1\\
t=years\to &16
\end{cases}
\\\\\\
A=40000\left[ \cfrac{\left( 1+\frac{0.03}{1} \right)^{1\cdot 16}-1}{\frac{0.03}{1}} \right][/tex]
