PreCalculus Questions

Question

You set aside $100 a month into an account that earns 3% interest (compounded monthly) for eighteen years. At the end of those eighteen years, how much money will be in the account?

$28,594.03
$171.49
$37,040.78
$12,595.85

Answer 1

I will start with the annuity form of future value. Where P is a constant addition of money to the investment per interest application. r is the interest value per period of application, and n is the number of interest periods that apply (suggestion: change yearly interest to monthly.)

Future Value = FV. P * (1 +r ) ⁿ - 1

= -------------------------

r