Question

you consistently deposit 250.00 into a savings account on the 15th of each month, and the amount earns a 2.5 APR How much is the balance of your savings account at the end of the 3rd FULL month?

Answer 1

Answer:

Balance of savings account at the end of 3rd month = $753.13

Step-by-step explanation:

Balance at the end of 1st month :

Principal = $250 , Time = 1 month , n = 12 , APR = 2.5%

$\text{Compound Interest = }Principal\times (1+\frac{rate}{n\times 100})^{n\times Time}\\\\=250\times (1+\frac{2.5}{12\times 100})^{12\times \frac{1}{12}}\\\\=\ 250.52$

Balance at the end of second month :

Principal = 250 + 250.52

              = 500.52

Time = 1 month, APR = 2.5%, n = 12

$\text{Compound Interest = }500.52\times (1+\frac{2.5}{12\times 100})^{12\times \frac{1}{12}}\\\\=\ 501.56$

Balance at the end of third month :

Principal = 250 + 501.56

              = 751.56

Time = 1 month, APR = 2.5%, n = 12

$\text{Compound Interest = }751.56\times (1+\frac{2.5}{12\times 100})^{12\times \frac{1}{12}}\\\\=\ 753.13$

Hence, Balance of savings account at the end of 3rd month = $753.13