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by **Lucas** » Sun Mar 10, 2013 8:58 am

MYP Maths, Financial Mathematics, Compound Interest, Present value

How can we calculate the amount to be deposit into an account to collect $20000 at the end of 6 years if the account is paying 4% per annum compounded every month?
Thanks

by **miranda** » Sun Mar 10, 2013 9:21 am

MYP Mathematics, Financial Mathematics, Compound Interest, Present value

The general compounding formula is:
$F=P \cdot (1+ \frac{r}{100})^n$

Where F is the future value of the investment (=$20000), P the principal, r is the interest rate per compound period $( \frac{4}{12}=\frac{1}{3})$ and n is the number of compounding periods (=6*12=72 months).

Therefore

$$20000=P \cdot (1+ \frac{1}{300})^{72}=>P=\$15738.84$

Hope these help!! :lol:

by **Lucas** » Sat Apr 06, 2013 7:56 pm

thanks miranda!!

by **Lucas** » Sat Apr 06, 2013 7:57 pm

thanks miranda!!

ib maths4u | ib maths | ib math | ib mathematics

MYP Mathematics, Present value

MYP Mathematics, Present value

Re: MYP Mathematics, Present value

Re: MYP Mathematics, Present value

Re: MYP Mathematics, Present value