contestada

You deposit $300 each month into an account earning 4% interest compounded monthly.

a) How much will you have in the account in 15 years?



b) How much total money will you put into the account?


c) How much total interest will you earn?

Respuesta :

Answers:

(a)  73827.15

(b)  54000

(c)  19827.15

=====================================================

Work Shown for Part (a)

FV = P*( (1+i)^n - 1 )/i

FV = 300*( (1+0.04/12)^(12*15) - 1 )/(0.04/12)

FV = 73827.1464633265

FV = 73827.15

For more information and examples, search out "future value of ordinary annuity formula".

You can use a TVM calculator to verify the answer.

TVM = time value of money

------------------------------------

Work Shown for Part (b)

15 years = 15*12 = 180 months

($300 per month)*(180 months) = $54,000 total deposit

------------------------------------

Work Shown for Part (c)

Subtract the results of parts (a) and (b)

73827.15 - 54000 = 19827.15

ACCESS MORE
ACCESS MORE
ACCESS MORE
ACCESS MORE