Question to Solve: (1 Viewer)

[annababe]

Hi Guys,

Just wondering how would you all solve this question:

Jo deposits $100 each month in her account for 10 years. How much does she accrue if the bank
pays 7% interest compounded on a half-yearly basis?

Everyone seems to have different answers and working out (especially $17463).

Thank you!

 

[legallaura]

i would use a graphics calculator... i don't know if u have one, but get one if you can.
they are magic for questions like this once you know how to use them!!!

otherwise, use the formula for 'future value of an annuity'.
this formula is on the formulae sheet they give you in HSC Gen Maths

A = what you want to find out
M = $100 (payment per month)
r = 3.5% (7% pa / 2 to get half-yearly)
n = 10 x 2 or 20 time periods

so try entering this in your calculator
A = 100 (((1+0.035)^20)-1)/0.035


umm does that help??? sorry i think my maths knowledge has already fuzzed since doing the exam last Tuesday!!!

 

[annababe]

Thanks for that however I'm still not 100% sure about the value of n. As the deposit is made monthly, should it be equal to 120?