Question

a)  The government deposits K400 000 into a saving and credit international institution investment scheme paying 60% annual interest compounded quarterly, how much money will accrue after 5 years?

b) The government deposits K6500 into an investment scheme paying 8% annual interest compounded monthly, how much money will be in the account after 7 years?

Answer 1

a)

Quarterly rate = 60% / 4 = 15%

Number of periods = 5 * 4 = 20

Future value = Present value (1 + r)^n

Future value = 400,000 (1 + 0.15)^20

Future value = 400,000 * 16.366537

Future value = K6,546,614.96

It will accrue K6,546,614.96

b)

Number of periods = 7 * 12 = 84

Monthly rate = 8% / 12 = 0.666667%

Future value = Present value (1 + r)^n

Future value = K6500 (1 + 0.0.00666667)^84

Future value = K6500 * 1.747422

Future value = K11,358.24

There will be K11,358.24