Answer to Question #211880 in Financial Math for Girly

Question

You are saving to pay for your children’s university costs in 20 years’ time. In the first year, your payment is R3 600, after which your yearly payments increased by R360 each year. If the expected interest rate per year is 10%, the amount that you expect to receive to the nearest rand on the maturity date will be

Answer 1

A = P ( 1+ r×t )

P = R3600 , r = 10% = 0.1 , t = 20 years

A = 3600 { 1 + ( 0.1 ×20) }

A = 3600 { 1 + ( 2 ) }

A = 3600 × 3

A = 10,800

A = R 10,800