Financial Maths question (1 Viewer)

[enigma_1]

How is this to be done?

A person pays $2000 into an investment fund every six months, and it earns interest at a
rate of 6%pa, compounded monthly. How much is the fund worth at the end of ten years?

 

[QZP]

Consider the sum of the separate funds.

 

[enigma_1]

Do you mean per month or per 6 months?

 

[braintic]

The first $2000 installment is invested for 120 months, so accrues to 2000(1.005)^120
The 2nd $2000 installment is invested for 114 months, so accrues to 2000(1.005)^114
The 3rd $2000 installment is invested for 108 months, so accrues to 2000(1.005)^108
.
.
.
The 20th $2000 installment is invested for 6 months, so accrues to 2000(1.005)^6

Now sum this GP, where a=2000(1.005)^6, r=(1.005)^6 and n=20