1.find the future value for the following investment :
a) RM19999 at 4.5% COMPOUNDED every 2 months for 2 year
b) RM 120000 at 5 3/4 percent compounded monthly for 3 1/4 years
a. P = Po(1+r)^n
Po = $19,999
r = (4.5%/6)/100% = 0.0075
n = 6comp./yr. * 2yrs. = 12 Compounding
periods.
Solve for P.
b. P = Po(1+r)^n
Po = $120,000
r = (5.75%/12/100% = 0.00479 = Monthly
% rate expressed as a decimal.
n = 12comp./yr. * 3.25yrs. = 39 Compounding periods.
Solve for P.
Principal amount 75000
Int rate 19%
time 22months
Find the compound interest
To calculate the future value of an investment, you can use the formula for compound interest:
Future Value = Principal * (1 + Interest Rate / n)^(n * t)
Where:
- Principal is the initial investment
- Interest Rate is the annual interest rate (expressed as a decimal)
- n is the number of times the interest is compounded per year
- t is the number of years
Now, let's calculate the future value for each investment:
a) RM19999 at 4.5% compounded every 2 months for 2 years:
- Principal (P) = RM19999
- Annual Interest Rate (R) = 4.5% = 0.045 (expressed as a decimal)
- Compounding Frequency (n) = 12 / 2 = 6 times per year (every 2 months)
- Time (t) = 2 years
Using the formula, we have:
Future Value = 19999 * (1 + 0.045 / 6)^(6 * 2)
= 19999 * (1 + 0.0075)^(12)
= 19999 * (1.0075)^(12)
= 19999 * 1.094309046
≈ RM21878.71
Therefore, the future value of the first investment is approximately RM21878.71.
b) RM120000 at 5 3/4 percent compounded monthly for 3 1/4 years:
- Principal (P) = RM120000
- Annual Interest Rate (R) = 5 3/4% = 5.75% = 0.0575 (expressed as a decimal)
- Compounding Frequency (n) = 12 times per year (monthly compounding)
- Time (t) = 3 1/4 years = 3.25 years
Using the formula, we have:
Future Value = 120000 * (1 + 0.0575 / 12)^(12 * 3.25)
= 120000 * (1 + 0.0047916667)^(39)
= 120000 * (1.0047916667)^(39)
= 120000 * 1.2398855395
≈ RM148786.26
Therefore, the future value of the second investment is approximately RM148786.26.