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you deposit 400$ each month into an account earning 2% interest compounded monthly. a) how much will you...

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Finance

youdeposit 400$ each month into an account earning 2% interestcompounded monthly.

a) how much will you have
in the account in 35 years?

b) how much money will you put into the account?

c) how much total interest will you earn?

Answer & Explanation Solved by verified expert
3.8 Ratings (548 Votes)

a) $ 2,43,038
Working:
Future value of annuity of 1 = (((1+i)^n)-1)/i Where,
= (((1+0.001667)^420)-1)/0.001667 i 2%/12 = 0.001667
= 607.5950664 n 35*12 = 420
Future value of monthly deposit = Monthly deposit * Future value of annuity of 1
= $                 400 * 607.59507
= $       2,43,038
b) $ 1,68,000
Working:
Amount invested = Monthly deposit * Number of months
= $                 400 * 420
= $       1,68,000
c) $     75,038
Working:
Total interest earned = Future value of deposits - Total amount invested
= $       2,43,038 - $ 1,68,000
= $           75,038

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Transcribed Image Text

youdeposit 400$ each month into an account earning 2% interestcompounded monthly.a) how much will you havein the account in 35 years?b) how much money will you put into the account?c) how much total interest will you earn?

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