Savings account interest

timer Asked: Jun 24th, 2014
account_balance_wallet $5

Question Description

You wish to deposit $500 per month into an account for 36 months. Assume your interest rate is 3.25%, compounded monthly. How much do you have after 36 months? Show formula and workout.

Tutor Answer

Alex Z
School: University of Virginia

Answer: $18,879.91

Formula: FV = C*[(1+i)^n-1]/i   , where C = monthly deposit, i = interest rate, n = number of periods

Thus, FV = 500*[(1+(.0325/12))^36-1]/i

FV = 500*.1022661606/.0027083333 = 18,879.91

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