Business Finance

You deposit $300 each month into an account earning 5% 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?

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  1. 25 years = 25*12 = 300 monthly periods
    interest rate monthly r = 0.05/12 = .0041666666...
    so every month multiply by 1.004166666..... and add 300
    formula:
    v = 300 [ 1.0041666^300 - 1 ] / .004166666
    = 300 [ 3.48129 -1 ] / 0.004166666
    = 300 [ 595.5 ]
    = 178,652.94

    b.
    300 * 300 = 90,000

    c. subtract b from a

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