Question

Mary deposits R400 every three months into a bank account earning interest at 16% per year, compounded quarterly. The approximate time that it will take Mary to save R40000 is

Answer 1

The approximate time that it will take Mary to save R40000 is 29 years

Explanation:

A= p(1+r/n)^nt

t = log(A/P) / n[log(1 + r/n)]

A = R40000

n = 4

P = R400

r = 16%

t = log(A/P) / n[log(1 + r/n)]

= log(40,000 / 400) / 4{log(1+0.16/4)}

= log(100) / 4{log(1+0.04)}

= 2 / 4{log(1.04)}

= 2 / 4(0.0170)

= 2 / 0.068

= 29.41

t = 29.41 years

Approximately 29 years

The approximate time that it will take Mary to save R40000 is 29 years