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Quarterly compounding of interest

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Kurt Daniels wants to buy a $30,000 car. He has saved $27,000. Find the number of years it will take for his $27,000 to grow to $30,000 at 4% interest compound quarterly. Please provide a detailed explanation.

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The terminology and general formula applicable to this problem are recalled, and a step-by-step solution, accompanied by a detailed explanation, is provided.

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Georgia Martin, PhD
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  • AB, Hood College
  • PhD, The Catholic University of America
  • PhD, The University of Maryland at College Park
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