Question

The Janus Enterprise fund had as of April 2013 a 10-year averae return of 12.54%. If Elaine deposited $325 a month in the fund for 5 years, find thevalue of the amount of er investments. Also find te total intrest earned. Assume monthly compounding.

Answer 1

To find the value of Elaine's investments and the total interest earned, we can use the formula for compound interest. Elaine deposited $325 a month for 5 years with a 12.54% average return rate per year. The value of the investments is approximately $23,047.29 and the total interest earned is $3,547.29.

Step-by-step explanation:

To find the value of Elaine's investments, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A = the future value of the investment
• P = the principal amount (amount deposited each month)
• r = the annual interest rate (in decimal form)
• n = the number of times interest is compounded per year
• t = the number of years

In this case, Elaine deposits $325 a month for 5 years, and the average return rate is given as 12.54% per year. Since the interest is compounded monthly, n = 12.

Plugging in the values, we have:

A = 325(1 + 0.1254/12)^(12*5)

Calculating this value gives:

A ≈ $23,047.29

To find the total interest earned, we subtract the total amount deposited from the future value:

Total interest earned = A - (325 * 12 * 5) = $23,047.29 - $19,500 = $3,547.29