To calculate the future value of Prince Charming's savings plan after 7 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/savings
P = the principal amount (R230)
r = the annual interest rate (7% or 0.07)
n = the number of times the interest is compounded per year (12, since it is compounded monthly)
t = the number of years the money is invested for (7 years)
Plugging in the values, we get:
A = R230(1 + 0.07/12)^(12*7)
A = R230(1 + 0.005833)^84
A = R230(1.005833)^84
A = R230(1.648045)
A = R378.47062
Therefore, Prince Charming will receive approximately R378.47 from his savings plan after 7 years.
Prince Charming pays a fixed amount of R230 at the beginning of each month for a period of 7 years towards a savings plan that earns interest of 7% per annum compounded monthly. What amount will he receive from his savings plan after 7 years?
1 answer
1 answer