SOLUTION: Jason deposited $100.00 at the end of each month for five years into an account paying 6% compounded monthly. What will be the balance in the account at the end of the five-year te

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: Jason deposited $100.00 at the end of each month for five years into an account paying 6% compounded monthly. What will be the balance in the account at the end of the five-year te      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 999001: Jason deposited $100.00 at the end of each month for five years into an account paying 6% compounded monthly. What will be the balance in the account at the end of the five-year term?
Answer by ikleyn(52894) About Me  (Show Source):
You can put this solution on YOUR website!
.
This is "Ordinary annuity saving plan".  On how it works see the lesson Ordinary Annuity saving plans and geometric progressions  in this site.

This  ordinary annuity  saving plan works in such a way that the first deposit earns interest at the monthly rate
of  6%2F12% = 0.5%  for  59 = 60-1  months.  For the last month of the period of 60 months the interest is not credited.
The second deposit earns interest for  58  months, the third deposit earns interest for  57  months, and so on.
The 59-th deposit earns interest for  1  month, and the last, 60-th deposit is not credited,  so it contributes to the
final balance without interest.

So,  Jason's balance at the end of the  5-th year is

Total = 100*%28%281.005%5E60-1%29%2F%281.005-1%29%29 = 6977.00.

Answer.  Jason's balance at the end of the  5-th year is  $6977.00.