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The Pirerras are planning to go to Europe 2 years from now and have agreed to set aside $110/month for their trip. If they deposit this money at the end of each month into a savings account paying interest at the rate of 6.5%/year compounded monthly, how much money will be in their travel fund at the end of the second year? (Round your answer to the nearest cent.)

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kamilli95

Answer:

$2811.6

Explanation:

If we calculate monthly interest earning : interest = $110 × 6.5% / 100%= $7.15. So monthly earning from their deposit is $7.15, thus annually is 12×$7.15= $85.8 . Given 2-year period, it leads to $85.8×2= $171.6 earning. We deposit $110 each month and at the end of 2 years our deposit will be $110×24= $2640. With compounding our deposit and the interest earning we find  $2640 + $171.6= $2811.6

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