SOLUTION: 28. Kay is saving $200 a month into an account earning 5% interest. How long will it
take her to save $20,000?
Algebra.Com
Question 1161707: 28. Kay is saving $200 a month into an account earning 5% interest. How long will it
take her to save $20,000?
Answer by greenestamps(13203) (Show Source): You can put this solution on YOUR website!
Assume contributions at the end of each month, and interest compounding monthly, the formula for the future value is
A = future value
P = periodic contribution
r = (annual) interest rate
n = # of contributions per year = $ of compounding periods per year
t = # of years
In this problem,
A = 20000
P = 200
r = .05
n = 12
t = to be determined
The unknown is in an exponent, so you will need to use logarithms or a utility like a graphing calculator.
to 2 decimal places
ANSWER: 6.98 years.
Since contributions are made monthly, her savings will be a bit over $20,000 after 7 years.
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