Aris saved RM 25,000 at 8% compounded monthly. Two years later, he withdrew RM 14,000 from the savings. Find the amount left in the account.
Aris saved RM 25,000 at 8% compounded monthly. Two years later, he withdrew RM 14,000 from the savings. Find the amount left in the account.
To find the amount left in the account, we first need to find the future value of Aris' savings after two years of compounding interest.
The formula for compound interest is:
FV = P(1 + r/n)^(nt)
Where:
FV = Future Value
P = Principal (initial amount)
r = Annual interest rate (converted to decimal)
n = Number of times interest is compounded per year
t = Number of years
In this case, Aris saved RM 25,000, the annual interest rate is 8%, compounded monthly (n = 12), and the duration is 2 years (t = 2).
Converting the annual interest rate to a decimal gives us:
r = 8% = 8/100 = 0.08
Now, we can substitute the values into the formula and calculate the future value (FV):
FV = 25000(1 + 0.08/12)^(12*2)
Simplifying further:
FV = 25000(1 + 0.0066667)^(24)
FV = 25000 * 1.0066667^24
FV ≈ 28,267.80
So, the future value of Aris' savings after two years is approximately RM 28,267.80.
Next, we need to find the amount left in the account after Aris withdrew RM 14,000. We subtract the withdrawal from the future value:
Amount left = Future Value - Withdrawal
Amount left = RM 28,267.80 - RM 14,000
Amount left ≈ RM 14,267.80
Therefore, the amount left in Aris' account after he withdrew RM 14,000 is approximately RM 14,267.80.
P = Po(1+r)^n.
r = 0.08/12 = 0.00666 = monthly % rate.
n = 12*2 = 24 compounding periods.
Calculate P and subtract the amount withdrawn.