Question

if you invested $5000 at 4% interest compounded monthly and added $500 in month 12, 24, 36, and 48; how much would you have after 10 years? Round to the nearest dollar.

Answer 1

Given

p =5000

r= 4% = 0.04

compound monthly

then r= 0.04/12 = 0.0033333

First compound period =12 month

Now

p for second year = 5203.70772 +500 = 5703.70772

A= 5703.70772*1.04741543 = 5936.085567

p for third year = 5936.085567 +500 = 6436.085567

A= 6436.085567*1.04741543 = 6698.301624

p for fourth year = 6698.301624+500 = 7198.301624

A =  7198.301624*1.04741543 = 7491.571538

p for next 6 years = 7491.571538+500 = 7991.571538

A = 7991.571538*1.270741879

A= 10155.22463

A= $10155 Answer