Question

Bob has saved $315 each month for the last 6 years to make a down payment on a house. The account earned an interest rate of .41 percent per month. How much money is in Bob's account

Answer 1

Answer:

The amount in Bob's account is $26320.516

Explanation:

The total amount saved each month for the down payment (A ) = $315

The interest rate per month (r ) = 0.41 %

Number of years (n ) = 6 years

Below is the calculation to find the total amount in Bob’s account. Here, we will take the number of compounding period as 72 because the interest rate is monthly compounded and there are 72 months in 6 years.

$= A\left [ \frac{\left ( 1+r \right )^{n\times 12}-1}{r} \right ] \\= 315 \left [ \frac{\left ( 1+ 0.0041 \right )^{6\times 12}-1}{0.0041} \right ] \\= 315\left [ \frac{\left ( 1+ 0.0041 \right )^{72}-1}{0.0041} \right ] \\= 26320.516$