Question

A $3,000 deposit for 66 months compounded at an annual interest rate of 1.6%. What is the interest and the account balance at the end of the 66 months

Answer 1

• interest: $275.77
• balance: $3,275.77

Explanation:

The account value is given by the compound interest formula:

A = P(1 +r/12)^n

Principal P invested at annual rate r compounded monthly for n months.

__

Using your parameters, the account balance would be ...

A = $3000(1 +0.016/12)^66 = $3275.77 . . . account balance

The interest is the difference between this balance and the original investment amount:

interest = $3000 -3275.77 = $275.77 . . . interest