For a lump sum investment of 250,000 invested at a stated annual rate of 3% compounded daily, what is the # of months needed to grow the amount to 1,000,000?
I tried something like
FV = 1,000,000
PV = 250,000
I = 3/365
CPT N = Error.
I assume when you get N you multiply by 365.
Which is wrong, i dont understand why in the answer they calculate EAR first and then they solve for N.
Can anyone tell me how to solve this using financial calculator?
You need either FV = 1,000,000 and PV = −250,000, or else FV = −1,000,000 and PV = 250,000.
When you get n (the number of days) you _ divide _ by 365 to get the number of years, then multiply by 12 to get the number of months.
You should get 16,867 days, 46 years, 555 months. More or less.
As S2000magician pointed out, one of PV or FV has to be negative; otherwise, your calculator gives up.
If you use the EAR of 3.0453% and set C/Y=1, your calculator will return the number of years required. I know some of you are aghast at the idea of setting P/Y and C/Y as needed, but I=3 and C/Y=365 will give you the same answer!!!