Lauren plans to deposit $5000 into a bank account at the beginning of next month and $250/month into the same account at the end of that month and at the end of each subsequent month for the next 5 yr. If her bank pays interest at a rate of 4%/year compounded monthly, how much will Lauren have in her account at the end of 5 yr? (Assume she makes no withdrawals during the 5-yr period.

django0a6

django0a6

Answered question

2022-11-05

Lauren plans to deposit $5000 into a bank account at the beginning of next month and $250/month into the same account at the end of that month and at the end of each subsequent month for the next 5 yr. If her bank pays interest at a rate of 4%/year compounded monthly, how much will Lauren have in her account at the end of 5 yr? (Assume she makes no withdrawals during the 5-yr period.

Answer & Explanation

merlatas497

merlatas497

Beginner2022-11-06Added 14 answers

So, use formula
F V = P V ( 1 + r n ) n t 1 + a ( ( 1 + r n ) n t 1 r n )
Put values
F V = 5000 ( 1 + 0.04 12 ) 12 × 5 1 + 250 ( ( 1 + 0.04 12 12 × 5 1 ) 0.04 12 ) = 6084 + 250 × 66.29 = 6084 + 16574.74 F V = 22650.74
Her balance in 5 years is $22658.74

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