QuestionJuly 27, 2025

What was the amount that you generated through the compound interest calculator?You invest 1000 and then plan to contribute 50 every month on top of this, earning an annual interest rate of 1.25% 25 1000 1616.02 7520.66

What was the amount that you generated through the compound interest calculator?You invest 1000 and then plan to contribute 50 every month on top of this, earning an annual interest rate of 1.25% 25 1000 1616.02 7520.66
What was the amount that you generated through the compound
interest calculator?You invest
 1000 and then plan to contribute 50
every month on top of this, earning an annual interest rate of
1.25% 
 25
 1000
 1616.02
 7520.66

Solution
4.4(294 votes)

Answer

\1616.02 Explanation 1. Calculate monthly interest rate Convert annual interest rate to monthly: r = \frac{1.25\%}{12} = 0.00104167. 2. Determine total number of periods For monthly contributions over a year, n = 12. 3. Apply compound interest formula for initial investment Use **A = P(1 + r)^n** for initial \1000: A = 1000(1 + 0.00104167)^{12}. 4. Calculate future value of monthly contributions Use **FV = C \left(\frac{(1 + r)^n - 1}{r}\right)** for \50 monthly: FV = 50 \left(\frac{(1 + 0.00104167)^{12} - 1}{0.00104167}\right). 5. Sum initial investment and contributions Total amount = Initial investment + Future value of contributions.

Explanation

1. Calculate monthly interest rate<br /> Convert annual interest rate to monthly: $r = \frac{1.25\%}{12} = 0.00104167$.<br />2. Determine total number of periods<br /> For monthly contributions over a year, $n = 12$.<br />3. Apply compound interest formula for initial investment<br /> Use **$A = P(1 + r)^n$** for initial $\$1000$: $A = 1000(1 + 0.00104167)^{12}$.<br />4. Calculate future value of monthly contributions<br /> Use **$FV = C \left(\frac{(1 + r)^n - 1}{r}\right)$** for $\$50$ monthly: $FV = 50 \left(\frac{(1 + 0.00104167)^{12} - 1}{0.00104167}\right)$.<br />5. Sum initial investment and contributions<br /> Total amount = Initial investment + Future value of contributions.
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