Answer to Question #117578 in Finance for lim

Question

without using finance calculator,
(a) Haziq invests RM15,000 in a fund at 7% compounded quarterly. After t years, the value of the investment is RM300,000. Determine the value of t.
(b) Sarah invested RM5000 into an account that pays 5% compounded semiannually. She intended to keep the account untouched for 5 years. However, after 3 years, she had to withdraw RM3000. Find the amount left in the account after five years from the time she made her investment.

Answer 1

a) After t years initial investment of RM15,000 would have value:

$15 000*(1+0.07/4)^{4t}=300000$

which means that:

$1.0175^{4t}=20$

$t=\frac{\log_{1.0175}20}{4}$

$t\approx43.169$ years

b) After three years Sarah had in her account the following sum:

$5000*(1+0.05/2)^6$

After withdrawal of 3 000 she had:

$5000*(1+0.05/2)^6-3000$

After two more years (i.e. five years she made her investment) she had:

$[5000*(1+0.05/2)^6-3000]*[1+0.05/2]^4\approx3088.984$ RM