Question #117589

Question 4

Without using finance calculator,

Refer to Johan's investment account, i.e. the monthly deposits made into his investment account:

Year Monthly deposits

2017 SR 500

2018 SR 400

2019 SR 700

Find the value of his investment at the end of 2019 if the investment rate was 12% compounded monthly. Find also the interest earned

Without using finance calculator,

Refer to Johan's investment account, i.e. the monthly deposits made into his investment account:

Year Monthly deposits

2017 SR 500

2018 SR 400

2019 SR 700

Find the value of his investment at the end of 2019 if the investment rate was 12% compounded monthly. Find also the interest earned

Expert's answer

These are annuities. We find by the formula:

"FVA=A\\times\\frac{(1+r)^n-1}{r}"

"r=\\frac{0.12}{12}=0.01"

Find the future value and interests

**2017-2019:**

"FVA=A\\times\\frac{(1+r)^n-1}{r}=500\\times\\frac{(1+0.01)^{36}-1}{0.01}=21538.44"

interests:

"21538.44-500\\times36=21538.44-18000=3538.44"

**2018-2019**

"FVA=A\\times\\frac{(1+r)^n-1}{r}=400\\times\\frac{(1+0.01)^{24}-1}{0.01}=10789.39"

interests:

"10789.39-400\\times24=10789.39-9600=1189.39"

**2019:**

"FVA=A\\times\\frac{(1+r)^n-1}{r}=700\\times\\frac{(1+0.01)^{12}-1}{0.01}=8877.75"

"8877.75-700\\times12=8877.75-8400=477.75"

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