how many months depositing 400/mo at 0.1% int. to get 29K

[ik123]

a car costs 29000$. If i save 400 a month into a savings account that gives 0.1% interest per month, how many months will i have to save to afford it?

please, the way is what matters here, not the solution. thank you.

 

[Deleted member 4993]

Re: please help me with this finance problem

a car costs 29000$. If i save 400 a month into a savings account that gives 0.1% interest per month, how many months will i have to save to afford it?
please, the way is what matters here, not the solution. thank you.

Do you know compound interest formula? If yes, what is it?

 

[tkhunny]

Re: please help me with this finance problem

Figure it out. No need to be fancy.

Make a deposit.

400

Credit interest

400(1.001)

Make another deposit

400(1.001) + 400

Credit Interest (and a little algebra)

(400(1.001) + 400)(1.001) = 400(1.001^2) + 400(1.001)

Make another deposit and credit interest (and a little algebra)

400(1.001^3) + 400(1.001^2) + 400(1.001) = 400*1.001*[1.001^2 + 1.001 + 1]

Make another deposit and credit interest

400*1.001*[1.001^3 + 1.001^2 + 1.001 + 1]

Make another deposit and credit interest (and a little algebra)

400*1.001*[1.001^4 + 1.001^3 + 1.001^2 + 1.001 + 1]

At some point, you should see a pattern of a geometric progression and that will almost have you done.

Make another deposit and credit interest (and a little algebra)

400*1.001*[1.001^5 + 1.001^4 + 1.001^3 + 1.001^2 + 1.001 + 1] = 400*1.001*[1 - 1.001^6]/[1 - 1.001]

If you can generalize

400*1.001*[1 - 1.001^(n+1)]/[1 - 1.001] = 29000

More algebra