Ahmad Irfan invested RM10,000 at 12% compounded monthly. The investment will be given to his three children when they reach 20 years old. Now, his three children are 15, 16 and 19 years old. If his three children will receive equal amounts, find the amount each will receive.
To solve this problem, we need to calculate the future value of the investment when each child reaches 20 years old.
Let's find the future value for each child individually:
For the first child (15 years old):
N = 20 - 15 = 5 years
r = 12% / 12 = 1% per month (converted to monthly interest rate)
P = RM10,000
Using the compound interest formula: FV = P(1 + r)^N
FV1 = RM10,000(1 + 0.01)^5 = RM10,000(1.01)^5
FV1 ≈ RM10,510.10
For the second child (16 years old):
N = 20 - 16 = 4 years
P = RM10,000
FV2 = RM10,000(1 + 0.01)^4 = RM10,000(1.01)^4
FV2 ≈ RM10,401.00
For the third child (19 years old):
N = 20 - 19 = 1 year
P = RM10,000
FV3 = RM10,000(1 + 0.01)^1 = RM10,000(1.01)^1
FV3 ≈ RM10,100.00
Now, the total amount available to be divided equally among the three children is:
Total Amount = FV1 + FV2 + FV3
Total Amount = RM10,510.10 + RM10,401.00 + RM10,100.00
Total Amount ≈ RM30,011.10
Since the three children will receive equal amounts, we divide the total amount by 3:
Amount each will receive = Total Amount / 3
Amount each will receive ≈ RM30,011.10 / 3
Amount each will receive ≈ RM10,003.70
Therefore, each of Ahmad Irfan's children will receive approximately RM10,003.70.