you are saving a 183000$ house. there are two competing banks in your area.both offering certificates...

you are saving a 183000$ house. there are two competing banks in your area.both offering certificates of deposit yielding 6.8%.
how long will it take to your initial 100000$ investment to reach the desired level at 2nd bank.which compounds interest monthly

Solutions

Expert Solution

Given Facts & Data:

Initial Investment i.e Present Value of Investment (PV) = $ 100,000

Rate of Interest (R) = 6.8 % *

Future Value (FV) = $ 183,000

(*with no additional information, it is assumed to be annual rate of interest)

To calculate the Number of months/periods ie. "n" to achieve the desired FV.

We know that, when interest is compounded monthly,

(using calculator)

ie. 107 periods OR 107 months

Therefore, It will take 8 years and 11 months for the initial investment to reach the desired level at the 2nd Bank.

jeff jeffy answered 2 years ago

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