Answer to Question #123676 in Financial Math for majd moussa

Question

You’re prepared to make monthly payments of $340, beginning at the end of this month, into an account that pays 6 percent interest compounded monthly. How many payments will you have made when your account balance reaches $20,000?

Answer 1

A = P ( 1+ r/n )^12t

Compounded monthly:

1 year = 12 months

= 0.06/12

= 0.005%

20000 = 340 ( 1+ 0.06/12)^12t

2000/340 = ( 1+ 0.005)^12t

5.8824 = 1.005^12t

Log 5.8824 = Log 1.005^12t

Log 5.8824 / Log 1.005 =

12t ( Log 1.005/ Log 1.005)

355.2782 = 12t

t = 355.2782/12 = ~ 29.6065months

= 29 months 18 days