Question

A savings account earns 7.2% (APR) interest calculated monthly, paid into the account at the end of 6 months. Mauricio deposits $300 into the account at the beginning of the first month. At the end of each month, he deposits an additional $100 into the account. How much interest will Mauricio have earned after 6 months?

Answer 1

I think that the answer is about $19.80

Answer 2

The answer is $19.80

Explanation:

A savings account earns 7.2% (APR)

Monthly interest rate will be =
`7.2/12/100=0.006`

Mauricio deposits $300 into the account at the beginning of the first month.

So, $300 will be calculated with 0.006 interest.

Interest value becomes =
`300*1.006=301.80`

Interest earned =
`301.80-300=1.80` dollars

At the end of each month, Mauricio deposits an additional $100 into the account. Means he deposits $600 in 6 months.

So, total interest on this will be =
`600(1.006)^(5)`

=$618

Now total interest earned will be
`618-600=18` dollars

Hence, total interest earned in 6 months will be
`1.80+18=19.80` dollars.