i want to invest $500 per month for 36 months at 3.25% interest. How much do i have total at the end of the 3 years?

Question

I started like this: 500 x 12mos (1st yr) then x 3.25. Ans:$19,500 adding that answer to another 6,000 times another 3.25 and by the end of 3 yrs I got $288,843.75. That just cant be right. and what would my total interest be?

Answer 1

The trick is that we're looking at percent here. When you see a number such as 3%, it's not 3, but 0.03.

(That's why we have "cents" for our coinage. 100 cents equals 1 dollar.)

 

Anyways, your problem sounds like not only do you have the interest, but you are also putting in another 500 dollars as well. If that is the case, then we have:

500m * 1.0325m

 

This equation can be simplified into other ways, but we'll stick with this for the meantime.

 

Since this is for 36 months, we have

500 * 36 *1.0325 * 36

 

Hitting the calculator, that gives us:

$669,060