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 Post subject: superannuation
PostPosted: Mon, 23 Aug 2010 09:53:07 UTC 
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Eve was born on the 1st January. On that day her grandparents opened a trust account by depositing $500 each year starting on the day of her birth. How much did Eve receive on her 20th birthday prior to the final deposit made. The interest earned on the account was 5% per annum compounded quarterly.


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 Post subject: Re: superannuation
PostPosted: Mon, 23 Aug 2010 13:33:52 UTC 
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Convert the 5% cpd. quarterly to its annual equivalent.
Use formula for future value of an annuity.

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PostPosted: Mon, 23 Aug 2010 15:22:49 UTC 
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An= P (1+r/*)^(*t)
where "*" represents number of times compounded per year.

A1= 500 (1+.05/4)^(4*20)
A2= 500 (1+.05/4)^(4*19)
A3= 500 (1+.05/4)^(4*18 )
.
.
.
A20= 500 (1+.05/4)^(4*1)

Now add up A1 to A20.


That's the long way, but as Denis mentioned, there is a formula for this.


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