Mr. Sparky puts away $250 from each monthly paycheck into an account that returns 7.89%
annual interest compounded monthly for his retirement.
a. How much will Mr. Sparky have saved up in his account if he makes these deposits for
20 years?
b. When he retires, he plans to live on the interest he earns each month. How much in
interest will he earn each month? (assume he can get the same interest rate as in part a)

Question

Mr. Sparky puts away $250 from each monthly paycheck into an account that returns 7.89%
annual interest compounded monthly for his retirement.
a. How much will Mr. Sparky have saved up in his account if he makes these deposits for
20 years?
b. When he retires, he plans to live on the interest he earns each month. How much in
interest will he earn each month? (assume he can get the same interest rate as in part a)

anonymous · Answer

A=R(1+r/m)^n-1/(r/m)
250(1+0.006575)^240-1/0.006575
250(3.820294148/0.006575)
(250)(581.0333305)=145,258.3326 saved up for 20 years

did i do this right for part A?

anonymous · Answer

@dpaInc  can you help me with this.. I think I solved Part A right.. can you check my work? :)