Question

You need to save a total of $7,500 in order to buy a new motorcycle. You are starting with savings of $4,000 but will make no additional contributions. The annual interest rate is 5%. In excel compute how long you would need to wait in order to reach your goal for interest that is compounded annually, semi-annually, quarterly, monthly, weekly, and daily. Which of the following accurately depicts this calculation?

		FV $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 PV $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Annual Rate 5% 5% 5% 5% 5% 5% PMT $0 $0 $0 $0 $0 $0 PPY 1 2 3 4 5 6 Period Rate 0.05 0.025 0.0167 0.0125 0.01 0.0083 Years 12.88 12.73 12.68 12.65 12.63 12.62 NPER 12.88 25.46 38.03 50.60 63.17 75.75 Frequency Annual Semi-annual Quarterly Monthly Weekly Daily
		FV $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 PV $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Annual Rate 1% 2% 3% 4% 5% 6% PMT $0 $0 $0 $0 $0 $0 PPY 1 2 4 12 52 365 Period Rate 0.01 0.01 0.0075 0.0033 0.00096 0.00016 Years 63.17 31.59 21.03 15.74 12.58 10.48 NPER 63.17 63.17 84.13 188.90 654.07 3824.35 Frequency Annual Semi-annual Quarterly Monthly Weekly Daily
		FV $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 PV $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Annual Rate 5% 5% 5% 5% 5% 5% PMT $0 $0 $0 $0 $0 $0 PPY 1 2 4 12 52 365 Period Rate 0.05 0.025 0.0125 0.00417 0.00096 0.00014 Years 12.88 12.73 12.65 12.60 12.58 12.57 NPER 12.88 25.46 50.60 151.18 654.07 4589.16 Frequency Annual Semi-annual Quarterly Monthly Weekly Daily
		FV $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 PV $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 Annual Rate 5% 5% 5% 5% 5% 5% PMT $0 $0 $0 $0 $0 $0 PPY 1 2 4 12 52 365 Period Rate 0.0500 0.0250 0.0125 0.0042 0.0010 0.0001 Years 12.88 25.46 50.60 151.18 654.07 4589.16 Frequency Annual Semi-annual Quarterly Monthly Weekly Daily

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

THIRD OPTION IS CORRECT. TRY TO TAKE 5-6 DECIMALS IN PPY TO GET CORRECT ANSWER