Answer to Question #311259 in Financial Math for Lee

Question

Lindiwe decides that she would like to buy her daughter a car when she turns 21 in six years time .She deposits R 6000 each month into an account earning 8.94% interest per year compounded monthly. The amount that Lindiwe will have available in six years from now is.

Answer 1

A=P(1+r/n)^nt

Since Lindiwe makes monthly contribution, we will multiply the amount by 12 to get 72000

72000(1+8.94%/12)^6*12

=72000(1.00745)⁷²

=122863.98

In six years, Lindiwe will have R 122863.98 in her account