Question

Jasmine wants to start saving to purchase an apartment. Her goal is to save $225,000. If she deposits $180,000 into an account that pays 3.12% interest compounded monthly, approximately how long will it take for her money to grow to the desired amount? Round your answer to the nearest tenth of a year.

Answer 1

The time it will take the principal to grow to the desired amount is 0.7 years

Using the compound interest formula :

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

A = final amount = 225,000

P = principal = 180,000

r = rate = 3.12%

n = Number of compounding times per period = 12(monthly)

t = time

225000 = 180000(1 + (0.0312 /12))^(12t)

Divide both sides by 180000

225000/180000 = (1 + (0.0312 /12))^(12t)

1.25 = 1.026^12t

Take the log of both sides

0.0969100 = 0.0111473 × 12t

0.0969100 = 0.1337676t

Divide both sides by 0.1337676 to isolate t

0.0969100 / 0.1337676 = t

0.7244 years

0.7 years

It will take 0.7 years for the amount to grow

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Answer 2

Answer:

7.2 (year)

Step-by-step explanation: