Question

You deposit $300 each month into an account earning 3% interest compounded monthly.
a) How much will you have in the account in 25 years?
$
b) How much total money will you put into the account?
$
c) How much total interest will you earn?
$

Answer 1

The amount you will have after 5 years is $ 634.51 and the total interest is $334.51

How to calculate the compound interest

The formula for calculating the compound interest is calculated as:

A = P(1+r/n)^nt

Given the following

P = $300

r = 0.03

t = 25years

n = 12

Substitute

A = 300(1+0.03/12)^12(25)
A = 300(1.0025)^300
A = 300(2.1150)

A = 634.51

Hence the amount you will have after 5 years is $ 634.51

b) Total amount interest earned =  634.51 - 300

Total interest earned is $334.51

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