Question 1139089: Julie is 23 and has started her first job. She plans to put aside R15 000 per year so that she can make a nice down payment on a house in six years time. If she pays the money at the end of each year into a savings account that earns 11,5% interest per year, compounded yearly, the accumulated amount at the end of six years is
Answer by ikleyn(52781)   (Show Source):
You can put this solution on YOUR website! .
It is a classic Ordinary Annuity saving plan. The general formula is
FV =  , (1)
where FV is the future value of the account; P is the annual payment (deposit); r is the annual percentage rate presented as a decimal;
n is the number of deposits (= the number of years, in this case).
Under the given conditions, P = 15000; r = 0.115; n = 6. So, according to the formula (1), you get at the end of the 20-th year
FV =  = 120200.74. ANSWER
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On Ordinary Annuity saving plans, see the lessons
- Ordinary Annuity saving plans and geometric progressions
- Solved problems on Ordinary Annuity saving plans
in this site.
The lessons contain EVERYTHING you need to know about this subject, in clear and compact form.
When you learn from these lessons, you will be able to do similar calculations in semi-automatic mode.
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