Jack and Jill need to save $7000 toward a new car. How long will it take...

Jack and Jill need to save $7000 toward a new car. How long will it take them if they save $330 a month earning interest at 6.5% per year? (Treat as an ordinary annuity.) (State your answer in years rounded to the second decimal place, e.g., 12.34)

Expert Solution

Number of payments required to achieve future value	=	log [(FV × r/ PMT) +1] /log(1+r)


Future value	FV	7,000.00
Rate per period	r
Annual interest		6.5%
Number of payments per year		12
Interest rate per period		0.065/12=
Interest rate per period		0.542%

Payment per period	PMT	$ 330.00

Number of payments	=	log [( 7000×0.00542/330) +1]/ long(1+ 0.00542)
	=	20.13
Years		1.68

Answer is:

1.68

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jeff jeffy answered 2 years ago

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