Question

You're prepared to make monthly payments of $465. Beginning at the end of this 20,031 month, into an account that pays 12 percent interest compounded monthly. How many N payments will you have made when your account balance reaches $20,031?​

Answer 1

The number of payments that I would make before the account balance reaches $20,031 is 31 months 15 days

N is the number of monthly payments that would be made before the account balance reaches $20,031.

This formula would be used to determine the value of N

FV = P ( 1 + r)^nm

• FV = future value = $20,031
• P = monthly payments = $465
• r = interest rate = 12%/12 = 1%
• n = number of years
• m = number of compounding = 12

$20,031 = $465 x (1.01)^12n

$20,031 / $465 = (1.01)^12n

43.077419 = (1.01)^12n

Log 43.077419 = Log (1.01)^12n

log 43.077419 / log (1.01) = 12n

1.6342497 / 0.0043214 = 12n

378.17598 = 12n

n = 378.17598 / 12

n = 31.51 months or 31 months 15 days

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