Teresa needs 4768 for a future project. She can invest 4000 now at an annual rate of 4.8% , compounded monthly. Assuming that no withdrawals are made, how long will it take for her to have enough money for her project?

Solution

T eres a n ee d s 4768 f or a f u t u re p ro j ec t . S h e c an in v es t 4000 n o w a t an ann u a l r a t e o f 4.8%, co m p o u n d e d m o n t h l y . A ss u min g t ha t n o w i t h d r a w a l s a re ma d e, h o w l o n g w i ll i t t ak e f or h er t o ha v e e n o ug h m o n ey f or h er p ro j ec t ?

Time : 3.67

Solution steps

Translate the problem into an equation:

4768 = 4000 (1 + \frac{0.048}{12})^{12 t}

Solve for

t, 4768 = 4000 (1 + \frac{0.048}{12})^{12 t} : t = 3.67

Time : 3.67