Question

Lauren plans to deposit $6000 into a bank account at the beginning of next month and $225/month into the same account at the end of that month and at the end of each subsequent month for the next 4 years. If her bank pays interest at a rate of 3%/year compounded monthly, how much will Lauren have in her account at the end of 4 years?

Answer 1

Answer:

$18206.5

Step-by-step explanation:

Considering,  r = interest rate

    n = number of intervals

    t = duration of the payment

    A = monthly installment  

   PV = Present Value

   FV = Final Value

Using the formula

FV=PV (1+ r/n$)^{nt-1$ + a((1+ r/n$)^{nt$-1/$\frac{r}{n}$)

FV=6000$(1+ \frac{0.03}{12} )^{(12)(4)-1} +225\frac{(1+0.03/12)^{(12)(4)}-1 )}{0.03/12}$

FV= 6747 + 11459.5

FV=18206.5

Her balance in 4 years is $18206.5