SOLUTION: In order to save for college graduation, Brenda decided to save Php 200 at the end of every other month, starting at the end of the month of the second month. If the bank pays 0.25

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Question 1184247: In order to save for college graduation, Brenda decided to save Php 200 at the end of every other month, starting at the end of the month of the second month. If the bank pays 0.250% compounded monthly, how much will be her money at the end of 5 years?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
she saves 200 at the end of every other month.
the interest rate is .250% compounded monthly.
growth factor = (1 + .250/1200)

i used excel to come up with the answer.
the answer is, as far as i can tell:
her money at the end of 5 years will be equal to $6036.40, rounded to the nearest penny.

the excel printout looks like this.





there are other ways to get the answer, but this was the most straight forward and easiest to understand.

5 years is equal to 60 months.
time period 0 is the current time period.
time period 1 is the end of month 1.
time period 2 is the end of momth 2.
etc.

the formula used is as follows:

balance at time period 0 is 0.

balance at time period 1 is equal to (1 + .25/1200) * balance at time period 0 plus payment at time period 1.

since there was 0 balance at time period 0 and 0 payment at time period 1, the balance at time period 1 is also 0.

balance at time period 2 is equal to (1 + .25/1200) * balance at time period 1 plus payment at time period 2.

balance at time period 2 is therefore equal to (1 + .25/1200) * 0 plus 200 = 200.

balance at time period 3 is equal to (1 + .25/1200) * balance at time period 2 plus payment at time period 3.

balance at time period 3 is therefore equal to (1 + .25/1200) * 200 + 0 = 200.0416667 which rounds to 200.04 as shown.

balance at time period 4 is equal to (1 + .25/1200) * balance at time period 3 plus payment at time period 4.

balance at time period 4 is therefore equal to (1 + .25/1200) * 200.0416667 plus 200 = 400.083342 which rounds to 400.08 as shown.

this continues time period by time period to the end.