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.
| 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
Get Answers For Free
Most questions answered within 1 hours.