Question
Question 5 An investment account pays interest at the rate of \( 5 \% \) per year, compounded semi-annually. What is the amount that should be deposited now so that R250 can be withdrawn at the end of every six months for the next 10 years? Draw an appropriate timeline showing all the given values. [5] TOTAL MARKS: 25 TOT
Ask by Riley Vega.
Mar 21,2025 19:22
UpStudy AI Solution
Tutor-Verified Answer
Answer
To have R250 withdrawn every six months for 10 years with a 5% annual interest rate compounded semi-annually, you need to deposit approximately R3900 now.
Solution
Sign in to Unlock Answers for Free!
A Learning Platform Trusted by Millions of Real Students and Teachers.
Unlock Answered by UpStudy AI and reviewed by a Professional Tutor
Like
Beyond the Answer
To tackle this problem, let’s dive into some fun finance facts! Did you know that interest compounding is like growing money on trees? When you deposit money, it earns interest, and then that interest earns even more interest! The magic happens because the initial amount plus the interest continues to accumulate, enhancing your total balance over time. So, every six months, you're pulling out R250, while your investment keeps blooming with interest.
Now, for a little practical magic: the present value formula for an annuity is your best friend here! You need to find out how much to invest now, given your withdrawals. Using the formula for the present value of an annuity, which considers the semi-annual compounding effect, you'll figure out how to balance those withdrawals with your initial deposit. Remember, always double-check your calculations to avoid those pesky math mistakes!
Related Questions
Jeremiah is a full-time student, earns less than \( \$ 30,000 \) a
year, is earning a degree and is a dependent of his
parents. Can he claim education tax deductions on his
taxes?
Yes, if his expenses are related to his studies and
are necessary
No, since he earns too much money to be able to
qualify for these tax credits
Yes, since he is a full-time student and earning a
degree
No, since he is still a dependent of his parents. They
can claim the credit.
Economics
Mar 20, 2025
Use the table to answer the following questions.
The marginal, or additional, gain from Bella's first hour spent working, from 7:00 AM to 8:00 AM, is 120 problems.
The marginal gain from Bella's third hour spent working, from 9:00 AM to 10:00 AM, is 60 problems.
The following week, Bella's statistics faculty advisor gives her some advice. In all their years of teaching they claim to observe that working on 105
students are able to review lecture notes at a constant pace during each hour spent studying.
Given this information, in order to use her 4 hours of time spent studying to get the highest possible test score, how many hours should she have
spent solving multiple choice problems, and how many hours should she have spent reviewing lecture notes?
0 hours working on problems, 4 hours reading
1 hour working on problems, 3 hours reading lecture notes. Form sime
3 hours working on problems, 1 hour reading
4 hours working on problems, 0 hours reading
Economics
Mar 22, 2025
What is an ongoing amount paid by an individual to maintain insurance coverage?
Select one:
Co-insurance
Deductible
Formulary
Premium
Economics
Mar 22, 2025
Question 3
Calculate the accumulated amount after eight years of weekly payments of R1 900 each into an account
earning \( 9,7 \% \) interest per year, compounded weekly.
Draw an appropriate timeline showing all the given values.
Economics
Mar 23, 2025
Nolwazi wants to buy a new state of the art computer for R35 000 .
She decides to save by depositing an
amount of R500 every month into an account earning \( 11,32 \% \)
interest per year, compounded monthly. How
many years (accurate to one decimal place) will it take Nolwazi to
have R35 000 available?
Draw an appropriate timeline showing all the given values.
Economics
Mar 21, 2025
