Answer to Question #182647 in Financial Math for PK NDINI

Question

Joshua graduated from college and began working in the family restaurant business. At the end of the third month of the first year he began putting R7440. 00 per quarter in an individual retirement account and contributed to it for a total of ten years. The account earned interest at 11% per annum, compounded quarterly. The amount that was available to him after the ten years is

Answer 1

John started saving on the third month of the first year ...meaning the first year, he saved 3\4 of the yr...the no of years he saved for is $9{3\over4}$ years

Because he saved quarterly , we multiply by 4 we get 39

Interest rate is 11% annually, because he saved quarterly , we divide by 4 ,the interest rate is therefore $11\over 4$

We apply the formula

$$P(1+r)^n$$

Where P is the principle 7440

ris the interest rate at 11\400

n I the time which is 39

$$7440(1+{11\over400})^{39}$$

$$=21432.08026$$