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Naomi wants to save $100 000, so she makes quarterly payments of $1500 into an account that earns 4.4%/a compounded quarterly. How long will it take her to reach her goal?

Naomi wants to save $100 000, so she makes quarterly payments of $1500 into an account-example-1
User Gloriann
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1 Answer

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Naomi's goal would be achieved in 12.57 years or 12 years and 7 months.

When will the goal be achieved?

Future value shows the process of determining the value of an investment or a sum of money at a future date, taking into account factors like interest rates, compounding periods, and initial principal.

The goal can be achieved when we use the formula for the present and future values. This gives us;

Future Value = 100000

FV = R. (1 + i)ⁿ - 1/i

100000 = 1500 * (1 + 0.044/4)⁴ˣ - 1 / 0.011

(1.011)⁴ˣ = 26/15

1.0447ˣ = 1.733

x = 12.57 years or 12 years and 7 months.

User Tgrrr
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