ray deposits $50 into a superannuation fund at the start of each month. The fund pays 15% interest which is compounded at the end of each month
i- find the value of the fund at the end of 10 years
ii- how many months will Ray have to contribute to the fund if he wishes the fund to be worth $25 000
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I will surely give it a try soon :
remember : |dw:1341657452319:dw|P = principal amount (the initial amount you borrow or deposit)
r = annual rate of interest (as a decimal)
t = number of years the amount is deposited or borrowed for.
A = amount of money accumulated after n years, including interest.
n = number of times the interest is compounded per year
There is a formula to calculate the monthly investment and return at a future period with Interest
Monthly Amount A= $50
Years n = 10 * (12 months) = 120
Rate yearly= 15% --- Monthly rate (r ) = 15/12= 1.25% = 1.25/100= 0.0125
Formula = A*(1+r) * (1+r)n -1
Substituting it: = 50*(1+0.0125) * (1+0.0125)120 -1
= $ 13,932.86
For getting $25000, in the same formula ‘’n’’ would be not there .. so it would get complicated. You might need Log or trial n error method to solve. I simply use EXCEL sheet n try replacing the N and the answer I found is 159 months approx. i.e. 13.25 years approximately
Hope I helped and you understood.