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
See previous post: Thu,4-24-14,6:24 AM.
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To find the future value of an investment with compounding interest, you can use the formula for compound interest. The formula is:
FV = P(1 + r/n)^(nt)
Where:
FV = Future Value
P = Principal Amount (initial investment)
r = Annual Interest Rate (expressed as a decimal)
n = Number of Times Compounded per Year
t = Number of Years
a) RM19999 at 4.5% compounded every 2 months for 2 years:
From the question, we know that:
P = RM19999
r = 4.5% = 0.045 (expressed as a decimal)
n = 12/2 = 6 (every 2 months, so 12 months/2)
t = 2 years
Plug in the values into the formula:
FV = 19999(1 + 0.045/6)^(6*2)
Now, calculate the result:
FV = 19999(1 + 0.0075)^(12)
FV = 19999(1.0075)^(12)
FV = 19999 x (1.10187467856)
FV ≈ 22,036.49
Therefore, the future value of the investment is approximately RM22,036.49.
b) RM 120,000 at 5 3/4 percent compounded monthly for 3 1/4 years:
From the question, we know that:
P = RM120,000
r = 5 3/4% = 5.75% = 0.0575 (expressed as a decimal)
n = 12 (compounded monthly)
t = 3 1/4 years
Plug in the values into the formula:
FV = 120,000(1 + 0.0575/12)^(12*3.25)
Now, calculate the result:
FV = 120,000(1 + 0.00479)^(39)
FV ≈ 134,905.45
Therefore, the future value of the investment is approximately RM134,905.45.