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#finance
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#investments
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#calculating-returns
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Thabo invests an amount of R9000 at the rate of 10,5% per annum for 18 months when interest is compounded half yearly. What will this investment amount to?
Thabo invests an amount of R9000 at the rate of 10,5% per annum for 18 months when interest is compounded half yearly. What will this investment amount to?
To calculate the future value of the investment, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where: A = the future value of the investment P = the principal amount (R9000) r = the annual interest rate (10.5% or 0.105) n = the number of times the interest is compounded per year (2 for half-yearly) t = the number of years the money is invested for (18 months or 1.5 years)
Plugging in the values:
A = 9000(1 + 0.105/2)^(2*1.5) A = 9000(1 + 0.0525)^3 A = 9000(1.0525)^3 A = 9000(1.158144) A = 10423.296
Therefore, Thabo's investment will amount to R10423.30 after 18 months when interest is compounded half yearly.