Question

You deposit $50 in a bank that offers 6% yearly compound interest and you add another $50 at the beginning of each year for another 4 years at the end of 5 years your total earnings in interest are

Answer 1

Total interest after 5 years = $48.77 to the nearest cent.

Explanation:

The first $50 grows to 50 * 1.06^5 = 66.911 = $16.911 interest.

The 2nd $50 grows to 50*1.06^4 = 63.124 = $13.124 interest.

3rd grows to 50*1.06^3 = 59.551 = $9.551 interest

4th grows to 50 *1.06^2 = 56.18 = $6.18 interest

5th grows to 53 = $3 interest.

Total interest = $16.911 + $13.124 + $9.551 + $6.18 + $3

= $48.77.