Rozilan needs $6,000 in three years’ time. Now, he saves $3,000 in an account that pay 7% per annum simple interest. Find the amount that he must save two years from now so that he can accumulate the $6,000.
To find the amount that Rozilan must save two years from now, we need to calculate the future value of his savings. This can be done using the formula for compound interest:
Future Value = Present Value * (1 + Interest Rate) ^ Number of Years
In this case, the present value is $3,000, the interest rate is 7%, and the number of years is 2. We can substitute these values into the formula:
Future Value = $3,000 * (1 + 0.07) ^ 2
Calculating the expression inside the parentheses first:
Future Value = $3,000 * (1.07) ^ 2
Simplifying the exponent:
Future Value = $3,000 * 1.1449
Multiplying:
Future Value = $3,434.70
Therefore, Rozilan must save approximately $3,434.70 two years from now in order to accumulate $6,000 in three years' time.