Joanna has been saving for retirement for 40 years. She made monthly deposits of\$275 and earned 5.6% annual interest, compounded monthly. According to her account documents, after these 40 years, she has a balance of \$491,730.35 in her account. How much of this did Joanna contribute and how much of this is interest?

Solution

Joanna has been saving for retirement for 40 years. She made monthly deposits of$275 and earned 5.6% annual interest, compounded monthly. According to her account documents, after these 40 years, she has a balance of $491, 730.35 in her account. How much of this did Joanna contribute and how much of this is interest?

Solution

Interest : 491455.35

Solution steps

Translate the problem into an equation:

491730.35 = 275 + I

Solve for

I, 491730.35 = 275 + I : I = 491455.35

Interest : 491455.35

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