QuestionMatt saves \$65 monthly at 5.5% annual interest. How much will he have in 30 months? Round to the nearest cent.
Studdy Solution
STEP 1
Assumptions1. The monthly deposit amount is $65. The annual interest rate is5.5%
3. The time for saving is30 months4. The interest is compounded monthly5. The interest rate is applied to the balance at the end of each month after the deposit is made
STEP 2
First, we need to convert the annual interest rate to a monthly interest rate. We can do this by dividing the annual interest rate by12.
STEP 3
Now, plug in the given value for the annual interest rate to calculate the monthly interest rate.
STEP 4
Convert the percentage to a decimal value.
STEP 5
Calculate the monthly interest rate.
STEP 6
Now, we will use the formula for the future value of a series to calculate how much Matt will have in30 months. The formula iswhereV = future value = monthly depositr = monthly interest raten = number of months
STEP 7
Plug in the values for the monthly deposit, monthly interest rate, and number of months to calculate the future value.
STEP 8
Calculate the future value.
Matt will have $2118.57 in30 months.
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