SOLUTION: Suppose a particular bank gives 3% interest on its savings accounts, compounded monthly. If one opens a savings account and deposits $ 300 each month for a total of 11 years, how m
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Question 542769: Suppose a particular bank gives 3% interest on its savings accounts, compounded monthly. If one opens a savings account and deposits $ 300 each month for a total of 11 years, how much money will be in the account after the last deposit is made?
Answer by solver91311(24713) (Show Source): You can put this solution on YOUR website!
You want the future value of an ordinary annuity:
^n\ -\ 1}{i}\right\])
Where
is the regular payment amount
is the interest per period as a decimal
is the number of periods.
3% per annum divided by 12 months is 0.06 divided by 12 equals 0.0025 per period.
11 years times 12 months per year is 132 periods.
So:
^{132}\ -\ 1}{0.0025}\right\])
Get out your calculator and get to work.
Note that this is only valid if you make the $300.00 deposit at the end of each month.
If you make the deposits at the beginning of each month, then you want the Future Value of an Annuity Due,
)
So for beginning of the month deposits you would just multiply your previous result by 
John
My calculator said it, I believe it, that settles it
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