Problema Solution
How long would it take $2,700 to grow to $9,200 if the annual rate is 4.2% and interest in compounded monthly?
Answer provided by our tutors
P = $2,700
r = 0.042 or 4.2%
A = $9,200
t = the time in months
A = P(1 + r/12)^t
2700(1 + 0.042/12)^t = 9200
1.0035^t = 9200/2700
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click here to see the equation solved for t
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t = 350.88 months or 351 months rounded to the next higher month
351 months = 29 years 3 months
The money should be compounded monthly for 29 years 3 months.