Another question (1 Viewer)

[BlueGas]

I need help for this unusual question.

Sorry for the "HSC" word right in the middle lol.

 

[rand_althor]

(i) The first investment is the $250 that is initially deposited. You are meant to find out the value of this $250 once it has been in the bank for 60 months (5 years = 60 months).

(i)) You should be familiar with how to write out the amount (A_n) of money in the bank account after n months. If you aren't I'll walk you through it.

 

[BlueGas]

(i) The first investment is the $250 that is initially deposited. You are meant to find out the value of this $250 once it has been in the bank for 60 months (5 years = 60 months).

(i)) You should be familiar with how to write out the amount (A_n) of money in the bank account after n months. If you aren't I'll walk you through it.

Okay so for i), what confused me is that when it said "first investment" I thought n = 1, I still don't know why n = 60, I mean I know that 12 x 5 = 60 but why do I need to do that?

What does the "policy matures... 5 years after her first investment" even mean?

 

[rand_althor]

Because the first investment, placed in at the start of the 5 years, has been in the bank account for 60 months at the end. By that time, it will have compounded 60 months worth of interest.

"policy matures..." refers to when the savings policy has reached the end of its term and Ester is able to collect the money.

 

[si2136]

(i) - P(1+r)^n = $250(1+[0.084/12])^60 = $379.93 (2dp)