Problema Solution
1.Suppose Mary deposits $200 at the end of each month for 30 years into an account that pays 5% interest compounded monthly.
1.How much total money will she have in the account at the end? =
2.How much total money did Mary actually deposit?
3.How much total interest did the account earn over that period? =
4.Suppose instead of making monthly deposits, Mary decides to deposit a “lump sum” into the account. How much must she deposit? What is this value also called?
Answer provided by our tutors
(1)
A=200*(1+5%/12)^(12*30)=893.55
So she has $893.55 in the account at the end
(2)
Mary actually deposit $893.55
(3)
$893.55-$200=$693.55
So the total interest is $693.55