Question

Cam saved ​$ 275 each month for the last four years while he was working. Since he has now gone back to​ school, his income is lower and he cannot continue to save this amount during the time he is studying. He plans to continue with his studies for four years and not withdraw any money from his savings account. Money is worth ​5.1 % compounded monthly.

​(a) How much will Cam have in total in his savings account when he finishes his​ studies?
​(b) How much did he​ contribute?
​(c) How much will be​ interest?
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Part 1
​(a) The future value is ​$

enter your response here.
​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

Answer 1

Cam will have approximately $16,422.61 in his savings account when he finishes his studies.

Step-by-step explanation:

To calculate the future value of Cam's savings account when he finishes his studies, we can use the future value of a series formula:

FV = PMT x (((1 + r)^n - 1) / r)

Where:

• FV = future value
• PMT = monthly savings amount ($275)
• r = monthly interest rate (5.1% / 12 = 0.425%)
• n = number of months (4 years x 12 months = 48)

Plugging in the values, we have:

FV = $275 x (((1 + 0.00425)^48 - 1) / 0.00425) = $16,422.61

Therefore, Cam will have approximately $16,422.61 in his savings account when he finishes his studies.