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### MYP Mathematics, Present value

Posted: 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 ### Re: MYP Mathematics, Present value Posted: 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!!

### Re: MYP Mathematics, Present value

Posted: Sat Apr 06, 2013 7:56 pm
thanks miranda!!

### Re: MYP Mathematics, Present value

Posted: Sat Apr 06, 2013 7:57 pm
thanks miranda!!