Jeremy is in Grade 8. He has a paper route and wants to save for his college education. He determines that he has $100 per month to put into an account at 6%/a compounded monthly. How much will he have at the end of five years for his college education?
n = 12 x 5 = 60
R = 100
I = 0.06/12 = 0.005
I know the answer is:
n = 12 x 5 = 60
R = 100
I = 0.06/12 = 0.005
= 100 ([1.005]^60 - 1)/.005
= 6977.00
But I have to draw a line diagram and I keep getting the following answers... I don't understand what i'm doing wrong. Can somebody please explain to me?
Time
(Years) Amount of money at the beginning of the year Interest for the year New amount of money by the end of the year
1 n/a n/a 1200$
2 1200$ 1200[0.6][12] = 86.40 1286.40$
3 1286.40$ 1286.40[0.6][12] = 92.62 1379.02$
4 1379.02$ 1379.02[0.6][12] = 99.29 1478.31$
5 1478.31$ 1478.31[0.6][12] = 106.44 1584.75$
1 answer