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

6400 = 270(1 + 0.039./12)^12t

Can you solve for t and answer?

Answer 2

We need the basic annuity formula to set this one up.

FV is future value = 6400

C is the cash flow = 270

i is the interest rate = 0.039

n is the number of payment periods = ?

You'll need to isolate the (1+i)^n expression and use logs to solve.