Answer to Question #304968 in Financial Math for Munki

Question

Kagiso wants to buy a new gaming computer for R40 000.He decides to save by depositing an amount of R400 quarterly into an amount earning 16% intrest per year, compounded quarterly. Thr approximate number of quarter's it will take kagiso to have R40 000 available is?

Answer 1

$t\ =\ ln(A/P)\ /\ n[ln(1\ +\ r/n)]$

$t\ =\ ln(40,000/400)\ /\ (\ 4\ \times\ [ln(1\ +\ 0.16/4)] )$

$t\ =\ ln(40,000/400)\ /\ (\ 4\ \times\ [ln(1\ +\ 0.04)] )$

$t = 29.354 \ years$ is the total number of years for Kagiso to have R40,000.

$no. \ of \ quarters \ = 29.354 \ *\ 4 = 117.416$

Kagiso will have an approximate of about 117 quarters.