Bob wants to save for a house downpayment by making,on a first day of every month,deposits of $ 500 into an account earning 0.5% monthly compound interest.If the first deposit is made on January 1,2017,find the approximate value in Bob's account on December 31,2022.
A) $ 2,625
B) $ 35,059
C) $ 30,143
D) $ 34,885

Question

Quizplus · Accepted Answer

The value in Bob's account can be calculated using the future value of a series formula for compound interest: $FV = P \times \frac{(1 + r)^n - 1}{r}$, where $P$ is the monthly deposit, $r$ is the monthly interest rate, and $n$ is the total number of deposits. Here, $P = 500$, $r = 0.005$ (0.5% monthly interest), and $n = 72$ (6 years of monthly deposits from January 2017 to December 2022). Plugging these values into the formula gives the future value of Bob's account, which is approximately $35,059.

Bob Wants to Save for a House Downpayment by Making,on