Results 1 to 6 of 6

- September 30th 2006, 08:12 AM #1
## Need Help

__A round table can be made square by dropping the four leavAt the end of everymonth Elle Deposits $500 into a savings account,with an anual interest rate of 6% compounded monthly.How much interrest will be earned at the end of 4 years?__

I am very confused about what to do

- September 30th 2006, 12:27 PM #2

- September 30th 2006, 12:30 PM #3

- Joined
- Nov 2005
- From
- someplace
- Posts
- 14,972
- Thanks
- 4

- September 30th 2006, 01:17 PM #4

- September 30th 2006, 07:20 PM #5

- September 30th 2006, 07:36 PM #6

- Joined
- May 2006
- From
- Lexington, MA (USA)
- Posts
- 12,024
- Thanks
- 832

Hello, Rimas!

At the end of every month, Elle deposits $500 into a savings account

with an annual interest rate of 6% compounded monthly.

How much interest will be earned at the end of 4 years?

This is an annuity problem which has this formula:

. . . . . . . . .(1 + i)^n - 1

. . A . = . D ----------------

. . . . . . . . . . . . . i

where*D*is the periodic deposit,*i*is the periodic interest rate,

. .*n*is the number of periods, and*A*is the final balance.

This problem has: D = $500, i = 6%/12 = 0.005, n = 47*****

. . . . . . . . . . . . . . . 1.005^47 - 1

We have: . A .= .500 ---------------- .≈ .$26,416.83

. . . . . . . . . . . . . . . . . .0.005

The final balance is: .$26,416.83 + 500 .= .$26,916.83******

Since she deposited 48 x $500 .= .$24,000

. . the interest is: .$26,916.83 - 24,000 .= .**$2,916.83**

*****

Since the deposits are made at the*end*of each period,

. . there are 47 compounding periods.

******

The last deposit is made at the end of the 48th month.

It draws no interest but is still part of the final balance.