Question

In order to accumulate enough money for a down payment on a house, a couple deposits $367 per month into an account paying 6% compounded monthly. If payments are made at the end of each period, how much money will be in the account in 7 years?

Amount in the account=

How much interest earned=

Answer 1

Answer:

Monthly deposit at the end the month = $367

Period = 7 years = 7*12 = 84 Month

Annual rate of interest = 6%

Monthly compounded

Monthly rate of interest = 6%/12 =0.5%

Using excel function FV:

FV (rate, nper, pmt, pv, 0)

FV (0.5%, 84, -367, 0, 0)

= $38,195.13

As such:

Total amount in the account = $38,195.13

Interest earned = Total amount in the account - Amount deposited = $38,195.13 - $367 * 84 = $7,367.13

Amount in the account = $38,195.13

Interest earned = $7,367.13