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You deposit $100 at the end of each quarter in a sinking fund earning 4% compounded quarterly. How many quarterly deposits must you make in order to reach your goal of saving $10,000? Round your answer off to the nearest whole number.

 Sep 16, 2014

Best Answer 

 #1
avatar+118703 
+5

This is the furure value of an ordinary annuity problem

S=R[(1+i)n1i]R=100i=0.04/4=0.01S=10000,n=?quarters10000=100[(1.01)n10.01]1=(1.01)n12=(1.01)nlog2=log(1.01)nlog2=nlog(1.01)n=log2log1.01

 

log10(2)log10(1.01)=69.6607168935748303

 

It will take 70

 

70/4=17.5 years

 Sep 16, 2014
 #1
avatar+118703 
+5
Best Answer

This is the furure value of an ordinary annuity problem

S=R[(1+i)n1i]R=100i=0.04/4=0.01S=10000,n=?quarters10000=100[(1.01)n10.01]1=(1.01)n12=(1.01)nlog2=log(1.01)nlog2=nlog(1.01)n=log2log1.01

 

log10(2)log10(1.01)=69.6607168935748303

 

It will take 70

 

70/4=17.5 years

Melody Sep 16, 2014

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