Question

Millet wants to provide a P200,000 graduation gift for her daughter Mae who is now 16 years old. She would like the fund to be
available by the time her daughter is 20. She decides on an investment that pays 10% compounded quarterly. How large must the
deposit be?​

Answer 1

Answer:

shjsfgd ho year, and a half

Answer 2

Deposit  must be about 1,34,725 at the age of 16 for 200,000 amount at the age of 20 years if 10% per annum compounded quarterly

Given:

• P200,000 amount at the age of 20
• Rate = 10% per annum compounded quarterly

To Find:

• Amount Deposited at the age of  16

Solution:

• $A=P(1 +\frac{r}{100n})^{nt}$
• r = rate of interest per annum in %
• t = time in years
• n = number of compounding in a year
• P = Amount Deposited
• A = Maturity Amount

Step 1:

Compounded Quarterly hence n = 4  as 4 Quarters in a years.

n = 4

Step 2:

Subtract 16 from 20 to get time in years

t = 20 - 16

t = 4

Step 3:

Use formula  $A=P(1 +\frac{r}{100n})^{nt}$ and substitute A = 200000 , r = 10 , n = 4 and t = 4 and solve for P

$200000=P(1 +\frac{10}{100\times4})^{4\times4}$

$200000=P( \frac{41}{40})^{16}$

P ≈ 1,34,725

Deposit  must be about 1,34,725