Question

You deposit $ 303 each month into an account earning 4.9 % interest compounded monthly for 6 years. How much total interest will you earn?$_____________ (Round to the nearest DOLLAR)

Answer 1

`\$103`

Step-by-step explanation

To find the total amount of interest, we first have to find the total amount after 6 years then subtract the principal (initial amount) from it.

The total amount for monthly compounding is given by:

`A=P(1+(r)/(12))^(12t)`

where

P = principal = $303

r = rate = 4.9% = 0.049

t = number of years = 6 years

Therefore, the total amount is:

`\begin{gathered} A=303(1+(0.049)/(12))^(12\cdot6) \\ A=303(1+0.004083)^(72)=303(1.004083)^(72) \\ A=303\cdot1.341 \\ A\approx\$406 \end{gathered}`

Now, subtract the principal to find the interest after 6 years:

`\begin{gathered} I=A-P \\ I=406-303 \\ I=\$103 \end{gathered}`

That is the interest.