If I deposit $400 each month into an account earning 8% interest compounded monthly, I will have $6,517 in my account in 35 years. The total money that I will put into the account is $168,000. I will earn a total compound interest of $6,117.
- Calculating the Sum of Money in 35 years
Given information is as follows,
Principal, P = $400
Rate = 8%
Time, T = 35 years
n = 12 (Compounded monthly)
The amount for compound interest is given as,
A = ![P\frac{(1+\frac{R}{n} )^{nT} -1}{R/n}](https://tex.z-dn.net/?f=P%5Cfrac%7B%281%2B%5Cfrac%7BR%7D%7Bn%7D%20%29%5E%7BnT%7D%20-1%7D%7BR%2Fn%7D)
A = ![400\frac{(1+\frac{0.08}{12} )^{12.35} -1}{0.08/12}](https://tex.z-dn.net/?f=400%5Cfrac%7B%281%2B%5Cfrac%7B0.08%7D%7B12%7D%20%29%5E%7B12.35%7D%20-1%7D%7B0.08%2F12%7D)
A = 6,517.02
A = $6,517 (to the nearest cents)
- Calculating the Amount Put in Account
Since, $400 is deposited every month for 35 years,
Amount Put in 35 years for this compound interest =$400 × 12 × 35
= $168,000
- Calculating the Compound Interest
A = P + CI
Thus, the compound interest is given by,
CI = A - P
CI = 6517 - 400
CI = $6,117
I will earn a total interest of $6,117
Learn more about compound interest here:
brainly.com/question/14295570
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