Question

How much money will be in an account into which $500 per month is deposited for 8 years, if the interest rate is 6% compounded monthly?

Answer #1

**The amount is computed as shown below:**

**Future value = Monthly deposits x [ [ (1 +
r)**^{n}**– 1 ] / r
]**

**r is computed as follows:**

= 6% / 12 (Since the interest is compounded monthly, hence divided by 12)

**= 0.50%**

**n is computed as follows:**

= 8 x 12 (Since the interest is compounded monthly, hence multiplied by 12)

**= 96**

**So, the amount will be as follows:**

= $ 500 x [ [ (1 + 0.005)^{96} - 1 ] / 0.005]

= $ 500 x 122.8285417

**= $ 61,414.27 Approximately**

**Feel free to ask in case of any query relating to this
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