Savings and Interest Concepts

The video tutorial explains the savings annuity formula by comparing two scenarios: saving $100 per month for 30 years versus $200 per month for 15 years, both with a 6% interest rate compounded monthly. It demonstrates the importance of starting to save early, as the first scenario results in a higher balance despite the same total contribution.

What is the interest rate used in the savings annuity formula?

• 5%

• 8%

• 7%

• 6%

How many times is the interest compounded annually in the savings annuity formula?

• 4 times

• 12 times

• 6 times

• 24 times

What is the balance after saving $100 per month for 30 years?

• $145,100

• $1,451

• $1,451,000

• $14,510

What is the balance after saving $200 per month for 15 years?

• $5,860.74

• $58,607.40

• $586,074.00

• $5,860,740.00

Why is it important to start saving early according to the video?

• To increase spending

• To reduce debt

• To avoid taxes

• To take advantage of compound interest