The account which pays nominal annual rate of 7% will take 75 month to grow to $280,000.
Here, we will employ the use of NPER Function in MS Excel to enable us derive the number of month it will take the account to grow to $280,000.
<u>Given information includes:</u>
Nominal annual rate of 7% compounded monthly
Principal = $3,000 at the end of each month
Future value = $280,000.
Number of month = NPER(Rate, -PMT, PV, FV)
Number of month = NPER(7%/12, -3000, 0, 280,000)
Number of month = 74.73099507
Number of month = 75 months
In conclusion, it will take 75 month to grow the account to the value of $280,000
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