Question

You are considering investing in a bank account that pays a nominal annual rate of 14.03% compounded monthly. If you invest $3,000 at the end of each month, how many months will it take for your account to grow to $150,000?

Answer 1

Approx. 336 months

Explanation:

Rate of interest = 14.03%

No. of compounds per year = 12

Let t be the time in years

Amount = $150,000

Principal = $3,000

Formula :
`A=P(1+(r)/(n))^(nt)`

`150000=3000(1+(14.03)/(100 * 12))^(12t)`

`t= 28.046`

S, time is approximately 28 years

1 year = 12 months

So, 28 years =
`12 * 28`

28 years =
`12 * 28 =336`

Hence it will take approx. 336 months for your account to grow to $150,000