SOLUTION: You deposit $300 each month into an account earning 8% 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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-> SOLUTION: You deposit $300 each month into an account earning 8% 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 1150348: You deposit $300 each month into an account earning 8% 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?
$
It is a classic Ordinary Annuity saving plan. The general formula is
FV = , (1)
where FV is the future value of the account; P is your monthly payment (deposit); r is the monthly percentage yield presented as a decimal;
n is the number of deposits (= the number of years multiplied by 12, in this case).
Under the given conditions, P = 300; r = 0.08/12; n = 12*15 = 180. So, according to the formula (1), you get at the end of the 15-th year
FV = = = $103811.50.
Note that you deposit only 12*15*$300 = $54000.
The rest, $103811.50 - $54000 = 49811.47 is what the interest.