You currently have \$4,000 in a bank account that pays a nominal rate of 1%, compounded monthly. You plan to make additional monthly deposits of \$200, starting at the end of this month. How many payments will you have made when your account balance reaches \$50,000?

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You currently have \$4,000 in a bank account that pays a nominal rate of 1%, compounded monthly. You plan to make additional monthly deposits of \$200, starting at the end of this month. How many payments will you have made when your account balance reaches \$50,000?

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Step 1

The interest that is calculated on all the accumulated interest of previous years or months plus initial principal amount is regarded as compound interest.

Step 2

Given:

Monthly payment = \$200

Present value = \$4000

Future value = \$50,000

Nominal interest (compounded monthly) = 1%

Step 3

Calculations:

The no. of payments can be calculated b...

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