Question

You invest $20 at the end of each year for the next 8 years at the annual rate of 7%. How much interest results from compounding (in dollars)?

Answer 1

Answer> Please refer to the table below:

Year	Investment	Beggining of year balance	interest @ 7%	End of year Balance
0	20	0	0	20
1	20	20	1.4	41.4
2	20	41.4	2.898	64.298
3	20	64.298	4.501	88.799
4	20	88.799	6.216	115.015
5	20	115.015	8.051	143.066
6	20	143.066	10.014	173.081
7	20	173.081	12.115	205.196
8	0	205.196	14.364	219.560

As seen from the year by year calculation made above,

if the amount is withdrawn at the end of 8th year (thereby the amount deposited at the 8th year end would earn no interest), the total amount earned as interest is 219.560 - (8*20) = 219.560 - 160 = 59.560

Hence the total interest resulted is $59.56

Hope this answers your question