Question

Matt is saving to buy a new motorcycle. If he deposits $60 at the end of each month in an account that pays an annual interest rate of 3.5%, how much will he have in 15 months? Assume that the compounding is being done monthly.,

Answer 1

This is a problem of compound interest because the interest received one month is added to the money deposited on which you calculate the interest the next month.

You need to apply the following formula:
C = P[
`(1+r)^(t)` - 1]
where:
C = compound interest you need
P = original amount of money deposited
r = is the rate, written as a rational number
t = number of months

Pluggin in numbers:
C = 60[
`(1+0.035)^(15)` - 1] = 40.52$

Now, you need to add this amunt to the original amunt:
(60+40.52) = 100.52$

Therefore, Matt will have 100.52$ after 15 months.