question archive A person is planning to invest a certain amount of money into a fund every three-month
A person is planning to invest a certain amount of money into a fund every three-month
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A person is planning to invest a certain amount of money into a fund every three-month. The first payment will be made now. That person wants to have 100,000 TL in this fund at the end of the fifth year. If the interest rate is 12%, how much money does he have to invest every month beginning now (what are the periodic payments)? (20 pts)
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He must invest 3721.57 every month to accumulate 100,000 TL
workings:
Number of periods (n) = 5years *4 quarters = 20 quarters
Interest rate per quarter (r)= 12%/4 =3%
Periodic payment = p
Future value of annuity =P*[(1+r)n -1 / r]
100,000= P*[(1+3%)20 -1 / 3%]
100,000 = P* (0.8061/3%)
100,000 = P* 26.8703
P = 100,000/ 26.8703
P = 3721.57
