Question

0

9

You deposit $200 each month into an account earning 7% interest compounded monthly.

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

https://ohm.lumenlearning.com/assess2/?cid=69660&aid=51 5/#/skip/

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

Answer 1

Explanation:

The monthly compound interest formula.

Future Value = monthly deposit x (1 + r) - 1/r

r = .07/12 = .00583

n = total number of time for compound = 35 years x 12 months/1 year = 420 months

PMT = monthly deposit = $200

Future Value = $200 x (1 + .00583)⁴²⁰ - 1/.00583

Future Value = $394,001.64 in 35 years

Total money you put into the account.

$200 x 420 months = $84,000

Total interest earned.

$394,001.64 - $84,000 = $310,001.64