Jimmy Jim invests $116 in a bank account at 6%. How many months (round up) does he need to leave his money in to buy a $134 blackberry playbook?

Question

Jimmy Jim invests $116 in a bank account at 6%. How many months (round up) does he need to leave his money in to buy a $134 blackberry playbook?

Answer 1

The question seems to infer a monthly compounding but it not definitive. So let’s do it all ways.
That is not a time consuming exercise on a business calculator.

 

Answer;
Annual compounding 36 months
Semiannual 30 months
Quarterly compounding 30 months
Monthly Compounding 29 months
Daily compounding 29 months...

How did we get that?
On you calculator all PV= -$116          you are putting money out of your pocket
All FV= + $134                                         you are putting money into your pocket
All PMT=$0                                                   No additional payments are made

The trick is the I for interest.

For annual I= 6%
For semiannual I= 3%           6%/2=3%
For quarterly I=1.5%             6%/4=1.5%
For monthly I=0.5%              6%/12= 0.5%
For daily I= .01644%             6%/365

Input all PV, PMT and FV at -$116, $0, $134 and the above appropriate amounts for the I’s and you get
Time periods of 3 years, 5 semiannual, 10 quarters, 29 months, 878 days.

Convert this to months at 12, 2, 4, 1, and 1/365

You get 36 months (annual), 30 months (semiannual), 30 months (quarterly), 29 months monthly), 29 Months (daily)