Question

The accumulated amount after eight years of monthly payments of R1 900 each into an account earning 9,7% interest per year, compounded monthly, is

[1] R274 069,25.

[2] R182 400,00.

[3] R126 532,64.

[4] R395 077,74.

[5] none of the above. 

Answer 1

Periodic payment PMT=1900

Rate of interest per period $i= \frac{0.097}{12}= 0.0080833$

Number of periods $n = 12 \times 8 = 96$

By future value formula

$FV = PMT(\frac{(1+i)^n-1}{i})\\ FV = 1900(\frac{(1+0.0080833)^{96}-1}{0.0080833} )\\ FV = 1900 \times 144.2467 \\ FV = 274068.76$

Answer: [1] R274 069,25.