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(a) $6000 this amount is to Arturo’s parents to invest after 10 years. (b) $2083.74 this amount is interest was earned after 10 years. (c) $8346.15 between the amount was earned.
What is interest rate?
An interest rate indicates how expensive borrowing is or how lucrative saving is.
Arturo’s parents deposit $50 each month
Interest rate, r = 5.75%
5.75%/12 = 23/4800 = 0.00479
In 10 years, tenure, N = 10 × 12 = 120 months.
Total Investment = monthly deposits x N
= $50 x 120 = $6000.
$6000 this amount is to Arturo’s parents to invest after 10 years.
FV = Monthly ×/r
FV = 50 ×
FV = $8083.74
Interest Earned in 10 years = $8083.74—$6000 = $2083.74
If they continue to invest for 20 years, tenure = 12 × 20 = 240 months.
FV =
FV =
FV= $22429.89
Interest Earned in 20 years = $22429.89—$12000 = $10429.89.
Interest Earned between 10 years and 20 years = $10429.89—$2083.74 = $8346.15
As a result, a) $6000 b) $2083.74 c) $8346.15 is an accurate answer.
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