question archive You deposit $200 each month into an account earning 4% interest compounded monthly
You deposit $200 each month into an account earning 4% interest compounded monthly
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You deposit $200 each month into an account earning 4% interest compounded monthly. a) How much will you have in the account in 20 years? $ b) How much total money will you put into the account? c) How much total interest will you earn? Question Help: Video 1 Video 2 Message instructor Submit Question
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GIVEN THAT,
R = regular payament made at the end of each month = $200
i = intrest (coumpound) applicable for the compounding period
r = intrest per annum
n = number of compounding periods ( coumpounded monthly)
N = number of years
FORMULA FOR ANNUITY FUTURE VALUE =
FV= R [ (1+ i )n - 1 / i ]
| R | r | N | compounding period | i | n |
| $200 | 4% | 20 years | monthly |
= 0.04/12 = 0.0033 |
20 *12 = 240 |
future value annuity = R [ (1+ i )n - 1 / i ]
= $200 [ ( 1 + 0.0033 )240 - 1 ] / 0.0033
= $73355.
A) $73355 will be in the account account in 20 years.
B) $200 *12 *20years = $48000.
C) intrest earned = $73355 - $48000 = $25355.
