Answer to Question #330536 in Finance for Kelsey Jand

Question

Use the compound interest calculator to answer the questions. Here are a few things to do when using the calculator:

Calculator Link: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

The Initial Investment will be the same as the Monthly Contribution.

Set the Compound Frequency to Annually.

Round all monetary answers to the nearest whole dollar.

Raul is a saver. He sets aside $100 per month during his career of 40 years to prepare for retirement. He does not like the idea of investing because he prefers to minimize his risk as much as possible, so he puts his money in a savings account which earns 1.5% interest per year.

What is the total balance in the account after 40 years?

How much of the total did Raul contribute himself?

How much money did Raul make through compound interest in this savings account?

Identify one way Raul could have increased the total amount of money he made over the 40 years. Explain your reasoning.

Answer 1

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