You are considering investing in a Third World bank account that pays a nominal annual rate of 18%, compounded monthly. If you invest $5,000 at the beginning of each month, how many months will it take for your account to grow to $250,000? Round fractional years up.
A) 23
B) 27
C) 32
D) 38

Question

Quizplus · Accepted Answer

The nominal annual rate of 18% compounded monthly results in a monthly interest rate of 1.5%. Using the future value of an annuity formula, it will take approximately 38 months for the account to grow to $250,000 when investing $5,000 at the beginning of each month.

You Are Considering Investing in a Third World Bank Account