Question

You deposit $500 each month into an account earning 4% interest compounded monthly. How much will you have in the account in 30 years? How much total money will you put into the account? How much total intrest will you earn?

Answer 1

Note - Since the question hasn't mentioned when the money will be deposited. I have assumed that it will be deposited at the end of the month.

Rate = 4% p.a.
Compounded Monthly Rate = {[(1+4%)^(1/12)]-1}
Compounded Monthly Rate = 0.32737%
Payment per month = $500
Total number of months = 12 * 30 = 360 months (30 years)

Future Value after 30 years is $342,635.28

Total money invested/put = 360*500 (360 months * $500/month)
Total money invested/put = $180,000

Total Interest Earned = Future Value - Total Money Invested
= 342,635.28 - 180,000
Total Interest Earned = $162,635.28