We are given,
Interest rate = 1%
Future value = $84,000
We can calculate number of periods/payments required in excel,
a) When Quarterly payments = $1,000
pmt | 1000 | |
Rate | 1% | |
Future Value | 84,000 | |
No of periods | 60.83 | (=NPER(1%,1000,0,-84000,1)) |
b) When Quarterly payments = $1,100
pmt | 1100 | |
Rate | 1% | |
Future Value | 84,000 | |
No of periods | 56.59 | (=NPER(1%,1100,0,-84000,1)) |
No of payments required so that FV is equal in both cases = 60.83 - 56.59 = 4.23 or 4(rounding off).
Hence it will take 4 more payments of $1,000 to equal FV with $1,100 payments.
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