Question

Asked Nov 14, 2019

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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?

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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