Question

leyroy opened a savings account 25 years ago with a deposit of 3080.43 the account has and inerest rate of 3.7 compounded monthly how much interest have leroy erned

Answer 1

Answer: 4,676.96

Procedure:

The formula for compounded interest is:

$factor, f=(1+r)^n$

Future value = investment * factor

Interests = future value - investment

Where r is the monthly rate, which you calculate as the % yearly rate divided by 12.

And n is the number of months which is equal to the number of years times 12.

These are the calculations:

$r=(3.7/100)/12=0.037/12=0.0030833$

$n=25*12=300$

$factor=(1+0.0030833)^{300}=2.518$

Future value = 3080.43 *2.518 = 7,757.39

Interests = 7,757.39 - 3080.43 = 4,676.96