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For 23 years, Janet saved $650 at the beginning of every month in a fund that earned 3.5% compounded annually.

a. What was the balance in the fund at the end of the period? $0.00 Round to the nearest cent
b. What was the amount of interest earned over the period? $0.00

User Doodloo
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1 Answer

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Final answer:

The balance in the fund at the end of the 23-year period is $903.27, and the amount of interest earned over the period is -$178,496.73.

Step-by-step explanation:

To find the balance in the fund at the end of the period, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the balance, P is the principal (amount saved each month), r is the annual interest rate (3.5% = 0.035), n is the number of times interest is compounded per year, and t is the number of years. In this case, P = $650, r = 0.035, n = 1 (compounded annually), and t = 23. Plugging in these values, we get: A = 650(1 + 0.035/1)^(1*23) = $903.27. Therefore, the balance at the end of the period is $903.27 (rounded to the nearest cent).

To find the amount of interest earned over the period, we can subtract the principal (total amount saved) from the balance. In this case, the principal is the total amount saved each month multiplied by the number of months: $650 * 12 * 23 = $179,400. Subtracting this from the balance, we get: $903.27 - $179,400 = -$178,496.73. Therefore, the amount of interest earned over the period is -$178,496.73 (rounded to the nearest cent).

User ErnestoE
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