Question

Joanna has been saving for retirement for 40 years. She made monthly deposits of $275 and earned 5.6% annual interest, compounded monthly. According to her account documents, after these 40 years, she has a balance of $491,730.35 in her account. How much of this did Joanna contribute and how much of this is interest?

Answer 1

Joanna deposited $132000 and her interest amount is $359730.35

Explanation:

Monthly deposit = $275

Interest = 5.6%

Time = 40 years

After 40 years her account balance = $491730.35

If she deposit $275 monthly then after 40 years she will have deposited ,

= 275 x 12 x 40

= $132000

The remaining is her interest amount.

Interest amount = 491730.35 - 132000

= $359730.35

Joanna deposited $132000 and her interest amount is $359730.35