Question

If you invest $1,200 into an account with an interest rate of 8%, compounded monthly, about how long would it take for the account to be worth $12,000?

Answer 1

Answer:

n= 346.37 months

Step-by-step explanation:

Giving the following information:

Initial investment (PV)= $1,200

Number of periods (n)= ?

Interest rate (i)= 0.08 / 12= 0.00667

Future Value (FV)= $12,000

To calculate the number of months required to reach the objective, we need to use the following formula:

n= ln(FV/PV) / ln(1+i)  

n= ln(12,000 / 1,200) / ln(1.00667)

n= 346.37 months

In years:

346.37/12= 28.86 years