Question

HELP PLEASE!!
Jennifer wants to take a trip around the world. She plans to deposit $125 at the beginning of each month into an investment with a 3.75% interest rate, compounded monthly. How much will she have in the account after 8 years?

$13,969.10

$14,012.75

$110,885.27

$115,043.47

Answer 1

First you want to find how much the interest is that will be added.

Answer 2

how do i do that? @beccaboo333

Answer 3

I confused myself @jdoe0001 @dumbcow @iambatman

Answer 4

this involves using a financial calculator or a somewhat complicated formula

the formula is based on the sum of a geometric series
\[S = 125 \frac{r (r^{96} -1)}{r-1}\]
where
\[r = 1 + \frac{i}{12}\]

Answer 5

it has to do with future value i just dont understand how to do it @beccaboo333

Answer 6

i know that is the future value equation

Answer 7

so what is FV= PV( 1+i)nt i thought that was future value formula

Answer 8

ahh it is but we don't know the present value either
all we know is she is depositing 125 every month for 96 months

Answer 9

im kind of confused i thought 125 would be the present value because thats whats being deposited

Answer 10

it would be if she just left it there, but every month she is adding another 125, this makes it more complicated

Answer 11

so in the formula you wrote does r represent the interest rate?

Answer 12

r is the growth factor
i is annual int rate

Answer 13

http://www.wolframalpha.com/input/?i=125r%28r%5E96+-1%29%2F%28r-1%29+%2C+r+%3D+1%2B%28.0375%2F12%29