saving $15 every four weeks and if the bank pays 5% interest compounded monthly how much interest earned after six months

Question

This is for my junior achievement class and I'm having trouble finding the sales tax.

Answer 1

The sales tax is irrelevant.

 

Figure out the starting $ in the account for the first month.  Call that P. Multiply by (1+0.05/12) to incorporate 5% interest for one twelfth of a year.  Now re-label this result P and then add in $15 for the next month.  So the P value used for the second month's calculation will have been slightly increased (for interest) and also by a new $15.

 

Repeat for months 2, 3, 4, 5 and 6.  The difficulty of this is that you said saving $15 every four weeks and this time interval is slightly less than most months(except February of non-leap years).  I have ignored this time-period difference.

 

You have to do the set of six calculations, each one using the latest "P".