Answer to Question #316188 in Financial Math for Tania

Question

The Boxing Fund must pay Daniel an old boxer, R18 000 every three months indenitely compensation.

Money is worth 11,4% per year,

ompounded quarterly.

1. What is the opening balance on this investment fund?

Answer 1

A_n= A₀ $({1+r})^{n}$

Where A_n= 18000

             A₀= Principal

         r= $\frac{0.114}{4}$  =0.0285 

    Compounded quartely i.e 4 compounds

           n= $4\times1$

$18000= A0 ({1+0.0285})^{4}$

$18000=1.0285^{4}$ A₀

18000=1.11897A₀

A₀=16,086.27