ECONOMICS (CBSE/UGC NET)

ECONOMICS

COMPOUND INTEREST

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Bob and Sue want to save a total of \$500, 000 for retirement. How much should they deposit monthly into an account that pays 4.5% interest, compounded monthly, to meet their goal in 25 years?
 A \$162, 668.00 B \$1, 626.68 C \$162.66 D \$106, 668.00
Explanation:

Detailed explanation-1: -Most competitive money market accounts offer APYs between 1.6% and 1.8%. A 1.8% APY would mean you earn \$9, 074.62 in the first year after depositing \$500, 000.

Detailed explanation-2: -You would need to deposit \$7007.08 to have \$12000 in 6 years.

Detailed explanation-3: -The future value of \$500 one year from today if the interest rate is 6 percent is \$530.

Detailed explanation-4: -FAQs on Monthly Compound Interest Formula The formula of monthly compound interest is: CI = P(1 + (r/12) )12t-P where, P is the principal amount, r is the interest rate in decimal form, and t is the time.

There is 1 question to complete.