Question

A father wants to have R16000 available for his sons education on his 18th birthday. Calculate the amount he must invest on his sons 10th birthday at 14% compounded interest?

Answer 1

No of years $18-10=8 years$

Rate = $\frac{14}{100}=0.14$

$16000=P(1+0.14)^8$

$16000=P(1.14)^8$

$P=\frac{16000}{(1.14)^8}=5608.94$

The amount he should invest is R5608.94