Question

Question 2 Jessie wants to buy a home theater set in cash in two years’ time. It is estimated that the price of a home theatre set is RM7500. She opens an account that pays 6% compounded every 6 months. How much should Jessie put into this account so that she will have RM7500 at the end of two years?

Answer 1

future value of an amount = amount invested* (1+r)^n

here,

future value = RM7500

amount invested =to be found out

r = 6% per annum =>6%*6/12 =>3% for 6 months period

=>0.03.

n = 2 years * 2 semi annual period per year

=>4.

now,

7500 =amount invested *(1.03)^4

=>amount invested = 7500 / 1.03^4

=>7500 / 1.12550881

=>6,663.65

Jessie should put RM 6,663.65 in account to have RM 7500 at end of two years at the given rate of interest