Question

Damarius is making some big life decisions! He decides it's time to start saving for his future and deposits $300 each month at 4.1% annual interest, compounded monthly, for 30 years. At the end of 30 years, he has an account balance of  $211,966.64. How much of this did Damarius contribute and how much of this is interest?

Answer 1

Solution :

As per the information given in the question we have

Damarius invested $ 300 each month for 30 years

Thus total Principal investment

= $ 300 * 12 months * 30 years

= $ 108,000

Thus total principal investment i.e., amount contributed by Damarius = $ 108,000

Further the account balance in Damarius’s account after 30 years = $ 211,966.64

Thus Principal Investment + Interest earned = Damarius’s account balance after 30 years

Applying the available information we have

$ 108,000 + Interest earned = $ 211,966.64

Interest earned = $ 211,966.64 - $ 108,000

= $ 103,966.64

Thus amount contributed by Damarius = $ 108,000 and the Interest earned = $ 103,966.64