SOLUTION: You deposit $500 each month into an account earning 2% interest compounded monthly.
a) How much will you have in the account in 15 years?
$
b) How much total money will
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Question 1121909: You deposit $500 each month into an account earning 2% 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?
$
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!
Depends.
If you make the first deposit at the END of the first compounding period (Future Value of Annuity, FVA) then the formula is:
^n\,-\,1}{r}\])
Where 
is the periodic payment, 
is the interest rate per compounding period expressed as a decimal, and 
is the number of compounding periods.
On the other hand, if your payment is made at the beginning of the first compounding period (Future Value of Annuity Due, FVAD), then the formula is:
\(P\[\frac{\(1\,+\,r\)^n\,-\,1}{r}\]\))
In your case, 
, 
, and 
. It is up to you to do the arithmetic after you decide which formula to use.
Total of deposits for 
is 
. For 
it is )
Total interest earned is either FVA minus Deposits or FVAD minus Deposits.
It is up to you to do the arithmetic after you decide which formula to use.
John
My calculator said it, I believe it, that settles it
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