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.

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?

Solutions

Expert Solution

	The amount to be received [Future value of the deposit] is
	given by: FV = 6000(1+r/m)^(mn)
	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

ekkarill92 answered 2 years ago

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