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Angelina deposits $3000 in a savings account on 1 January 2019, earning compound interest of 1.5% per year.

a) Calculate how much interest (to
the nearest dollar) Angelina would
earn after 10 years if she leaves the
money alone.

b) In addition to the $3000 deposited
on January 1st 2019, Angelina
deposits a further amount of $1200
into the same account on an annual
basis, beginning on 1st January 2020.
Calculate the total amount of money
in her account at the start of January
2030 (before she has deposited her money for that year).

Respuesta :

The interest earned would be $481.62.

The total amount of money in her account would be $16,377.12.

Determining interest after 10 years

Interest = future value - amount deposited

$3000 (1.015)^10 = $3,481.62

Interest =  $3,481.62 - $3000 = $481.62

Determining the future value of the account.

 Future value of the lump sum = $3000 x (1.015)^11 = $3,533.85

Future value of the annuity = amount deposited x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r = [(1.015)^10 - 1] / 0.015 = 10.702722

Future value =  10.702722 x $1,200 = $12,843.27

Total future value =  $12,843.27 + $3,533.85 = $16,377.12

To learn more about future value, please check: https://brainly.com/question/18760477

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