Question

Karl opens a savings account with $2500. He deposits $1500 every year into the account that has a 0.75% interest rate, compounded monthly. If he doesn't withdraw any money, what will the account balance be in 10 years?

Answer 1

$1500 divided by 12 months = $125 per month. 0.75% x 120 (10 years x 12 months in each) = 90%. $125 x 120 = $15,000 + ($125 x 90%= $11,250) = $26,250. $26,250 + $2500 = $28,750 overall in the account after 10 years