logo for solving-math-problems.com
leftimage for solving-math-problems.com

Value of Investment after 2 years










































Find the accumulated amount after 2 years if RM 35,000 is invested at 3.8 % per year compounded:

(i) Annually
(ii) Semi Annually
(iii) Monthly

Comments for Value of Investment after 2 years

Click here to add your own comments

Oct 07, 2012
Value of Investment
by: Staff


Answer:

The interest rate paid by the bank is a constant: 3.8 % per year.


A = P*(1 + r)t

A = final value of investment
P = principle invested (the initial investment)
r = decimal form of interest rate per time period
t = time in time periods

P = RM 35,000

(i) Final Value of Investment if interest is compounded Annually


r = .038 (this is the decimal form of 3.8%. It is = 3.8%÷100)
t = 2 years


A = P*(1 + r)t

A = 35000*(1 + .038)2

A = 35000*(1.038)2

A = 35000*(1.077444)

A = 37710.54

If interest is compounded annually, the value of the investment after two years = RM37710.54


(ii) Final Value of Investment if interest is compounded Semi Annually


r = .038 ÷ 2 = 0.019 (0.038 is the decimal form of 3.8%. It is = 3.8%÷100)
t = 4 sixth month time periods


A = P*(1 + r)t

A = 35000*(1 + 0.019)4

A = 35000*(1.019)4

A = 35000*(1.078193566321)

A = 37736.77

If interest is compounded semi-annually, the value of the investment after two years = RM37736.77



(iii) Final Value of Investment if interest is compounded Monthly


r = .038 ÷ 12 = 0.0031666666667 (0.038 is the decimal form of 3.8%. It is = 3.8%÷100)
t = 24 one month time periods


A = P*(1 + r)t

A = 35000*(1 + 0.0031666666667)24

A = 35000*(1.0031666666667)24

A = 35000*(1.078833)

A = 37759.15

If interest is compounded monthly, the value of the investment after two years = RM37759.15



Thanks for writing.

Staff
www.solving-math-problems.com


Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Math Questions & Comments - 01.



Copyright © 2008-2015. All rights reserved. Solving-Math-Problems.com