Sally Deposits $\$ 100$ At the End of Each Month into an Account That

question 29

Short Answer

Sally deposits $\$ 100$ at the end of each month into an account that pays $6 \%$ annual interest compounded monthly. After 5 years of deposits, what is the account balance?

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Definitions:

Effective Annual Rate

The effective annual rate is the actual return on an investment after accounting for compounding interest over a one-year period.

Nominal Annual Rate

The interest rate stated on a loan or investment agreement, not adjusted for inflation or other factors that affect real value.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done monthly.

Invest

The act of allocating resources, usually money, with the expectation of generating an income or profit.