Answer to Question #265602 in Financial Math for shehan mendis

Question

An insurance fund invests Rs. 500,000 at the beginning of each year for five years at an interest rate of 8.5% p.a. Calculate the total amount in the fund at the end of year 5.

Answer 1

Amount invested each year = P = $500000

Number of years = n = 5

Interest Rate = r = 8.5%

Hence, Future Value $= P[\frac{((1+r)^n -1)}{r}](1+r)$

= $500000[\frac{((1+0.085)^5 -1)}{0.085}](1+0.085)$ = $3,214,514.75