SOLUTION: On his son's 3rd birthday his parents deposited P20,000 in his name in a investment house paying 2 7/12% every three months. Find the value of his savings when he reaches age 18.

Question 1202319: On his son's 3rd birthday his parents deposited P20,000 in his name in a investment house paying 2 7/12% every three months. Find the value of his savings when he reaches age 18.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
18 - 3 = 15 years of investment.
every 3 months is compounded quarteerly.
15 years * 4 quarters per year = 60 quarter.
2 and 7/12% per quarter = 2.58333333...% per quarter.
this is a one time investment at the beginning of the invewtment period.
the formula to use is f = p * (1 + r) ^ n
f is the future value
p is the present value
(1 + r) is the growth factor per quarter
n is the number of quarters.
the formula becomes f = 20,000 * (1+.0258333333...) ^ 60 = 92,392.86.
that's how much will be in the account at the end of the investment period.

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