You can afford monthly deposits of $270 into an account that pays 3.9% compounded monthly. How long will it be until you have $6,400 to buy a​ boat?

Question

You can afford monthly deposits of $270 into an account that pays 3.9% compounded monthly.

How long will it be until you have $6,400 to buy a​ boat?

Type the number of​ months: ______

​(Round to the​ next-higher month if not​ exact.)

Answer 1

FV = PMT((1 + i)^nt - 1)/i; FV·i/PMT + 1 = (1 + i)^nt; t = ln(FV·i/PMT + 1)/[nln(1 +i)];

WE have PMT = $270; FV = $6400; i = 0.039/12 = 0.00325; n = 12.

t = 1.9 year = 23 month