Answer to Question #266481 in Financial Math for Nikki

Question #266481

A father wants to have R16000 available for his sons education on his 18th birthday. Calculate the amount he must invest on his sons 10th birthday at 14% compounded interest?

1
Expert's answer
2021-11-16T11:21:38-0500

No of years 1810=8years18-10=8 years


Rate = 14100=0.14\frac{14}{100}=0.14


16000=P(1+0.14)816000=P(1+0.14)^8


16000=P(1.14)816000=P(1.14)^8


P=16000(1.14)8=5608.94P=\frac{16000}{(1.14)^8}=5608.94


The amount he should invest is R5608.94


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