Question

Molemo is planning a trip to America to visit his friend in two years’ time. He makes an
itinerary for his holiday and decides to deposit R9 800,00 into a savings account at the end of
every six months. The first deposit starts six months from now. The account earns interest
at the rate of 10,7% per year, compounded half-yearly. The amount that he will have in his
account at the end of two years is [1] R42 459,50. [2] R34 469,64. [3] R12 071,58. [4] R20 648,60.

Answer 1

Given : deposit R9 800.00 into a savings account at the end of  every six months. The first deposit starts six months from now. The account earns interest  at the rate of 10,7% per year, compounded half-yearly

To find :  The amount that he will have in his  account at the end of two years

Solution:

Amount Deposited after 6 months , 1 Year , 1.5 year , 2 Years

= 9800 * 4  

= 39200

Amount  for 1 st deposit ( with 1.5 year interest) =  9800 ( 1  + 10.7/200)³

= 11458.55

Amount  for 2nd deposit ( with 1  year interest) =  9800 ( 1  + 10.7/200)²

= 10876.65

Amount  for 3rd  deposit ( with 6 month) =  9800 ( 1  + 10.7/200)

= 10324.3

Amount for 4th Deposit (with no interest) = 9800

Adding all = 11458.55 + 10876.65 +  10324.3 + 9800 = 42459.50

42459.50 is the account that he will have in account at end of 2 years

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