Question

Yolanda deposits $300 per month in an account with an APR of 6%, while Zach deposits $3600 at the end

Answer 1

Answer:

Yolanda will have a balance of $34,043.10 in 14 years.

Step-by-step explanation:

This is an Ordinary annuity question where you pick the hint from the equal and recurring monthly payment.

To find the Future value of Yolanda's savings after 14 years, use Future value of annuity formula FVA = $\frac{PMT}{r}[1-(1+r)^{-t} ]$

PMT= recurring payment = $300

r = discount rate; monthly rate in this case = 6% / 12 =0.5% or 0.005 as a decimal.

t = total duration ; 14 *12 = 168 months

Next, plug in the numbers into the FVA formula;

FVA = $\frac{300}{0.005} [ 1-(1+0.005)^{-168} ]$

FVA = 60,000 * 0.5673849

FVA = 34,043.0969

Therefore, Yolanda will have a balance of $34,043.10 in 14 years