Suppose you invest $1,000.00 in an account with an annual interest rate of 6% compounded monthly (6%÷÷12 = 0.5% each month). At the end of each month, you deposit $275.00 into the account. Use this information to complete the table below. Round to the nearest cent in each step as needed. Month Prior Balance 0.5% Interest on Prior Balance Monthly Deposit Ending Balance 0 $1,000.00 1 $1,000.00 $275.00 2 $275.00 $1,561.40 3 $1,561.40 $275.00 4 $9.22 $275.00
Suppose you invest $1,000.00 in an account with an annual interest rate of 6% compounded monthly (6%÷÷12 = 0.5% each month). At the end of each month, you deposit $275.00 into the account. Use this information to complete the table below. Round to the nearest cent in each step as needed. Month Prior Balance 0.5% Interest on Prior Balance Monthly Deposit Ending Balance 0 $1,000.00 1 $1,000.00 $275.00 2 $275.00 $1,561.40 3 $1,561.40 $275.00 4 $9.22 $275.00
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Suppose you invest $1,000.00 in an account with an annual interest rate of 6% compounded monthly (6%÷÷12 = 0.5% each month). At the end of each month, you deposit $275.00 into the account.
Use this information to complete the table below. Round to the nearest cent in each step as needed.
| Month | Prior Balance | 0.5% Interest on Prior Balance |
Monthly Deposit | Ending Balance |
| 0 | $1,000.00 | |||
| 1 | $1,000.00 | $275.00 | ||
| 2 | $275.00 | $1,561.40 | ||
| 3 | $1,561.40 | $275.00 | ||
| 4 | $9.22 | $275.00 |
Expert Solution
Step 1 Concept
To complete this table we have add simple interest on ending balance and then add deposit balance to find the ending balance of next month. and iterate the process till get complete the table.
simple interest = ending balance * rate of monthly interest %
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