Question

Phathu needs R10 500 in ten months' time to buy herself a new lens for her camera. Two months ago she deposited R9 000 in a savings account at a simple interest rate of 11,5% per year. How mu h money will Phathu still need to buy the lens ten months from now?

1.     R465,00

2.     R229,50

3.     R637,50

4.     R408,67

5.     None of the above

Answer 1

Amount required after 10 months = R10,500

Two months ago amount deposited = R 9000

Interest Rate =11.5%

Interest rate per month (r)$= 11.5\%/12 = 0.958333 = 0.00958333$

Months of compounding for 9000 is 10+2 (n)= 12

Therefore, amount after 10 months $= 9000\times(1+r)^n$

$=9000\times(1+0.00958333)^{12}$

$=9000\times[1.12125928]$

$=10091.33$

Therefore, Amount required $=10500 - 10091.33 = 408.67$

The correct answer is  4.     R 408.67