QuestionAugust 9, 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
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Answer

\ 1616.02 Explanation 1. Identify the formula for compound interest with regular contributions Use the formula for future value of a series: **FV = P \left(1 + \frac{r}{n}\right)^{nt} + PMT \left(\frac{\left(1 + \frac{r}{n}\right)^{nt} - 1}{\frac{r}{n}}\right)** where P is the initial principal, PMT is the monthly contribution, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. 2. Substitute the values into the formula P = 1000, PMT = 50, r = 0.0125, n = 12, t = 1. Calculate each part separately. 3. Calculate the compound interest on the initial investment 1000 \left(1 + \frac{0.0125}{12}\right)^{12 \times 1} = 1000 \times 1.0126 \approx 1012.60 4. Calculate the future value of the monthly contributions 50 \left(\frac{\left(1 + \frac{0.0125}{12}\right)^{12 \times 1} - 1}{\frac{0.0125}{12}}\right) \approx 603.42 5. Add both results to find the total amount 1012.60 + 603.42 = 1616.02

Explanation

1. Identify the formula for compound interest with regular contributions<br /> Use the formula for future value of a series: **$FV = P \left(1 + \frac{r}{n}\right)^{nt} + PMT \left(\frac{\left(1 + \frac{r}{n}\right)^{nt} - 1}{\frac{r}{n}}\right)$** where $P$ is the initial principal, $PMT$ is the monthly contribution, $r$ is the annual interest rate, $n$ is the number of compounding periods per year, and $t$ is the time in years.<br /><br />2. Substitute the values into the formula<br /> $P = 1000$, $PMT = 50$, $r = 0.0125$, $n = 12$, $t = 1$. Calculate each part separately.<br /><br />3. Calculate the compound interest on the initial investment<br /> $1000 \left(1 + \frac{0.0125}{12}\right)^{12 \times 1} = 1000 \times 1.0126 \approx 1012.60$<br /><br />4. Calculate the future value of the monthly contributions<br /> $50 \left(\frac{\left(1 + \frac{0.0125}{12}\right)^{12 \times 1} - 1}{\frac{0.0125}{12}}\right) \approx 603.42$<br /><br />5. Add both results to find the total amount<br /> $1012.60 + 603.42 = 1616.02$
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