Answer to Question #224719 in Financial Math for Zee

Question

after six months you deposit R1700 jnto an ordinary savings account, at 7,5% interest per anum, compounded six monthly. six months later you you deposit another R1600 and six months later you deposit R1700 into the same account. calculate the balance in this account at the end of 2 years

Answer 1

In this we have to calculate future value using future value formula.

Annual interest rate =7.5%

Semiannual interest rate=3.75%

Future value =Deposit (1+r)ⁿ

Future value $=1700(1.0375)^3 +1600(1.0375)^2 +1700(1.0375)$

Future value $=R5384.51$

This is future value at end of 2 years.

Future value =R5384.51

This is future value at end of 2 years.