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A couple want to save $100,000 to pay for their daughter's education. They put $2,000 into...

A couple want to save $100,000 to pay for their daughter's education. They put $2,000 into a fund at the beginning of every month. Interest is compounded monthly at a nominal rate of 7%. How long does it take for the fund to reach $100,000?

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Answer #1

Answer : Calculation of Number of years that will take the fund to reach $100000

Reason :

Using NPER function of Excel we can calculate number of years

=NPER(rate,pmt,pv,fv,type)

where rate is rate of interest per interest i.e 7%/12

pmt is the periodic payment i.e 2000

pv is the present value i.e 0

fv is the future value i.e 100000

type is 1 as the payments are made beginning of every month.

=NPER(7%/12,2000,0,-100000,1)

On putting this values

NPER will return 43.77684 months or 3.65 years (43.77684 / 12)

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