Question

Beginning in January, a person plans to deposit $400 at the end of each year into...

Beginning in January, a person plans to deposit $400 at the end of each year into an account earning 9% compounded annually. Each year taxes must be paid on the interest earned during that year. Find the interest earned during each year for the first 6 years.

Homework Answers

Answer #1
Year 1 Starting deposit value = closing deposit value of previous year (A) Interest = starting deposit value * interest rate (B) Closing deposit value (A+B)
1 $400.00 $36.00 $436.00
2 $436.00 $39.24 $475.24
3 $475.24 $42.77 $518.01
4 $518.01 $46.62 $564.63
5 $564.63 $50.82 $615.45
6 $615.45 $55.39 $670.84

the interest rate is compunded annually hence the interest for year 2 sall be on the amount of deposit in year 1 + interest in year 1

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