Question

Find the savings plan balance after 18 months with an APR of 6% and monthly payments of 300$.The balance is $

Answer 1

Explanation

To answer the question, we will make use of the formula

$A=P\times\frac{(1+\frac{APR}{100n})^{n\times N}-1}{(\frac{APR}{100n})}$

Where

$\begin{gathered} APR=6 \\ n=number\text{ of times compounded in a year=}12 \\ N=Number\text{ of years=}\frac{18}{12}=1.5 \\ P=300 \\ \end{gathered}$

Thus

$\frac{APR}{100n}=\frac{6}{100\times12}=\frac{1}{200}=0.005$$\begin{gathered} A=300\times\frac{(1+0.005)^{12\times1.5}-1}{0.005} \\ \\ A=300\times18.784 \\ \\ A=\text{ \ 5635.20} \\ \end{gathered}$

Thus, the balance will be $5635.20