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Sylvia has been saving for a down payment for the purchase of a condominium for 10 years. Monthly deposits of \$375 are made into an annuity that earns 4.25% annual interest, compounded monthly. According to account, documents, after these 10 years, there is a balance of \$55,952.72 in the account. How much interest has the account earned. Round the answer to the nearest cent.

Solution

Sylvia has been saving for a down payment for the purchase of a condominium for 10 years. Monthly deposits of $375 are made into an annuity that earns 4.25% annual interest, compounded monthly. According to account, documents, after these 10 years, there is a balance of $55, 952.72 in the account. How much interest has the account earned. Round the answer to the nearest cent.

Solution

Amount : 573.17

Solution steps

Translate the problem into an equation:

A = 375 (1 + \frac{0.0425}{12})^{12 \cdot 10}

375 (1 + \frac{0.0425}{12})^{12 \cdot 10} = 573.16589 \dots

Round to the nearest hundredth:

573.17

Amount : 573.17

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