In: Accounting
Mr Usiku invested N$ 6000 in a fixed deposit
account with the Global bank for the three years at the rate of
interest of 15% p.a.
a) How much will Mr Usiku receive upon maturity if interest is
compounded bi- annually?
b) How much will Mr Usiku receive upon maturity if interest is
compounded quarterly?
The amount to be received [Future value of the deposit] is | ||
given by: FV = 6000*(1+r/m)^(m*n) | ||
where, r = annual rate of interest, m = number of compoundings | ||
per year and n = number of years | ||
a] | Future value = 6000*(1+0.15/2)^6 = | $ 9,259.81 |
b] | Future value = 6000*(1+0.15/4)^12 = | $ 9,332.73 |