Write out the formula you used, please...
Hi! Can somebody solve this for me, it's pretty easy, but the result the book gives me seems wrong (or I'm wrong!). I need a second opinion though...here it is:
A man saves 250£ every half-year and invests it at Compound Interest at 4.5 per cent. What will be the amount of his savings in 8 years if the last amount saved bears interest for 6 months?
Thanks for the help everyone!
P.S. The book gives me 4,860£ pounds but as much as I try I get 4,900..
Welcome to Math Help Forum!
At the end of the first six months, he would then have:£ £before he makes his second investment of £ .
At the end of the next six months he has:£ £before his next investment; and so on.
Continuing in the same way, at the end of years, he has £ £ .
Problem is not clear.
Anyhow, future value of 16 deposits of 250 @ 2.25% = 4751.35 :
at this point, last deposit has been made, and has earned no interest.
4751.35 * 1.0225 = 4858.25 : close to your book's of 4860.
Above would be answer to:
how much can be withdrawn 6 months after the last deposit?
Thanks guys, it's like you said, the book isn't clear and I made the mistake of calculating 4.5% on a yearly basis when it should've been 2.25 every 6 months; in my original formula:
(1.045x (1.045 to the power 7 - 1))
divide all that by 1.045-1 and multiply by 500
add the result by 250 and multiply by 1.045
add by 250 again = 4889.
But if I do instead (1.0225x (1.0225 to the power 16 -1)
divide by (1.0225-1) and multiply by 250 = 4860!
I used a geometrical sum formula that I'm sure you're familiar with. Thanks again. Sorry for writing the formula in such an awful way, but I haven't been able to find any special characters button in the message window.