Question

Suppose you want to have $ 749,791 for retirement in 13 years. Your account earns 9.5 % interest monthly. How much interest will you earn?$_________ (Round to the nearest DOLLAR)

Answer 1

$530,663

Step-by-step explanation

The amount the account will have in t years is given by,

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

Where n = 12, t = 13 years, r = 0.095 and A = 749,791. We have to find P,

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

Replace with the values and solve,

`P=(749,791)/((1+(0.095)/(12))^(12\cdot13))\approx219,128`

The interest earned is the difference between the initial deposit P and the final amount A,

`i=A-P=749,791-219,128=530,663`

Hence, the interest earned would be $530,663.