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Ester sets up a saving policy for herself in order to save money to buy a car. She invest $250 at the beginning of every month.The savings policy earns 8.4% per annum and is compounded monthly 

I) show the value of her first investment is $379.93

II) Calculate the total value of Esters savings policy after 5 years

 Jun 16, 2016

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1) Use this formula: FV=PV[1 + R]^N

FV=250[1 + 0.84/12]^5*12

FV=250 x 1.5197362

FV=$379.93

 

11) Use this formula:FV=P{[1 + R]^N - 1/ R}.[1+R]

FV=250{[1 + 0.084/12]^5*12 - 1/0.084/12}.[1+0.084/12]

FV=250  x [1.5197362 - 1 / 0.007] x 1.007

FV=350 x 74.248 x 1.007

FV=$18,691.94

 Jun 16, 2016

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