A savings account earns 6% (APR) interest calculated monthly, paid into the account at the end of 6 months. Travis deposits $100 into the account at the beginning of the first month. At the end of each month, he deposits an additional $100 into the account. How much interest will Travis have earned after 6 months?

Question

Mathematics

Dexter Simpson

16 March, 19:31

A savings account earns 6% (APR) interest calculated monthly, paid into the account at the end of 6 months. Travis deposits $100 into the account at the beginning of the first month. At the end of each month, he deposits an additional $100 into the account. How much interest will Travis have earned after 6 months?

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Answers (1)

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Alanna Weber · Answer 1

The monthly increase can be written as a multiplier = 100%+6% = 106% = 1.06

End of month 1 = 100*1.06 = 106

Beginning of month 2 = 106+100 = 206

End of month 2 = 206*1.06 = 212

Beginning of month 3 = 212+100 = 312

End of month 3 = 312*1.06 = 330.72

Beginning of month 4 = 330.72+100 = 430.72

End of month 4 = 430.72*1.06 = 455.8

Beginning of month 5 = 555.8

End of month 5 = 555.8*1.06 = 589.148

Beginning of month 6 = 689.148

End of month 6 = 689.148*1.06 = 624.49688

The amount of interest Travis will receive at the end of month 6 is

624.49688 - 600 = 24.49688 ≈ $24.50