If you invest 250.00 for 10 years at 6%,coumpounded monthly, what would the interest be. The amount I calculated for the investment is 40,969.83, but I am not sure of the interest.

Question

If you invest 250.00 for 10 years at 6%,coumpounded monthly, what would the interest be. The amount I calculated  for the investment is 40,969.83, but I am not sure of the interest.

Henry · Answer

Pt = Po(r + 1)^n. r = 6% / 12 = 0.5%/mo = o.005, n = 12 comp/yr * 10 yr = 120 comp. Pt = 250(1.005)^120, Pt = 250 * 1.8194 = 454.85. Int. = 454.85 - 250 = 204.85.