Quick Financial App Q 2007 hsc (1 Viewer)

[karnage]

Q9 c ii

Can you please explain how to get A1, A2 etc for that Q.
From what i interpret, the person puts in 3 $1000 contributions i.e.
1st birthday - $1000
2nd birthday - $1000
3rd birthday - $1000

It doesnt include the day the person was born right?


The way i was taught in class was

A1 = P(1+R)
A2 = P(1+R)^2 + P(1+R)
A3 = P(1+R)^3 + P(1+R)^2 + P(1+R)
etc etc

 

[stormz89]

isn't it like compound interest?

so its
A1 = 1000 x (1.06)^3 because its 3 years
A2 = 1000 x 1.06 (because it increases) x 1.06^2 because theres 2 years left
A3 = 1000 x 1.06^2 because it has increased again x 1.06 because theres one year left.


so A = 3 x 1000 x 1.06^3

which is 3573.05

 

[karnage]

Oh, guess i read too much into it.

Um it says 'she contributes $1000 on the day of her son's birth'
Does that mean the day her son was actually born or just his birthday?

 

[stormz89]

Oh, guess i read too much into it.

Um it says 'she contributes $1000 on the day of her son's birth'
Does that mean the day her son was actually born or just his birthday?

of her son's birth.

Meaning she somehow deposited 1000 into an account on the same day she pushed him out.

 

[karnage]

A1 = P(1+R)
A2 = P(1+R)^2 + P(1+R)
A3 = P(1+R)^3 + P(1+R)^2 + P(1+R)
etc etc

How would u do it using this i.e. A2 would include A1 as well as the value contributed in A2.

 

[stormz89]

How would u do it using this i.e. A2 would include A1 as well as the value contributed in A2.

the simple thing to do is write each year our and then add them all together hence why I said 3x 1000 x 1.06^3

 

[karnage]

the simple thing to do is write each year our and then add them all together hence why I said 3x 1000 x 1.06^3

Ok mate, thanks alot for the help

Good luck if you're sitting the exam tommorow

 

[stormz89]

Ok mate, thanks alot for the help

Good luck if you're sitting the exam tommorow

I am, you too.