00:01
So in this video we're looking at to deposit $100 each month into an account earning 7 % interest compounded monthly.
00:07
Now the statement is actually needs a bit more refinement because 7 % interest compounded monthly is ideally stating 7 % is always for annually.
00:18
So it's the 7 % annual interest compounded monthly.
00:23
So that needs to be that needs to be emphasized.
00:26
How much will you earn? how much will you have in the account in 30 years time? that's the first question.
00:31
Second question is, how much total money will you put in the account? and third question is how much total interest would you have earned by the end of 30 years? so the formula for the amount earned per, you know, a number of years is a equal to a small a divided by i into 1 plus i by k times n to the power k minus 1.
00:55
Here we have a small a is the amount that is being deposited monthly which is hundred dollars.
01:01
I is the rate of interest in this case given to be seven by hundred to seven by seven by seven by hundred.
01:07
K is the number of months in a year so that would be 12 and is the number of years that the person is actually depositing this amount which is 30 years time.
01:16
So n times k is 360 as to summarize the calculation...