Investments

[chelsea88]

You just put $2341 in a CD that is expected to earn 8% compounded monthly, and $40,000 in a savings account tht is expected to earn 4% compounded annually. Determine when, to the nearest year, the values of your two investments will be the same.

Ive tried using the future value for compound interest formula: a= p(1+r/m)n power, for 2, 20, 50, 60, and 100 years. There must be an easier way to find when the investments are the same without all of the guessing. And I am not sure if I am using the correct formula.

 

[Denis]

First, convert the 8% cpd monthly to equivalent cpd annually: (1 + .08/12)^12 - 1 ; that'll be approx .083 (or 8.3%)
Let number of years = y; then:
2341(1.083^y) = 40000(1.04^y)
Solve for y (you should get slightly over 70 years).