You are here:

Advanced Math/Compound interest.

Advertisement

Expert: - 8/25/2011


Question
If i had two sons aged 16 and 19 and their birthday was on the same day and i had R100000 in total to split between my sons ,on their 25th birthday their amounts will be equal.Intrest 8.6% compounded quaterly . calculate the value of the investment made for the younger son

Answer
Questioner:Pri
Country:Gauteng, South Africa
Category:Advanced Math
Private:No
Subject:Financial Maths Question

Question:

If i had two sons aged 16 and 19 and their birthday was on the same day and i had R100000 in total to split between my sons ,on their 25th birthday their amounts will be equal.Intrest 8.6% compounded quaterly . calculate the value of the investment made for the younger son

The 16-YO will have 9 years, or 36 quarters.  If you give him P1 smackers now, he will have:

P1(1 + 0.86/4)^36

at age 25.

The 19-YO will have 6 years, or 24 quarters.  If you give him P2 smackers now, he will have:

P2(1 + 0.86/4)^24

at age 25.

.............................

These two must be equal.  Take it from there.

Advanced Math

All Answers

Answers by Expert:

Ask Experts

Volunteer

Paul Klarreich

Expertise

I can answer questions in basic to advanced algebra (theory of equations, complex numbers), precalculus (functions, graphs, exponential, logarithmic, and trigonometric functions and identities), basic probability, and finite mathematics, including mathematical induction. I can also try (but not guarantee) to answer questions on Abstract Algebra -- groups, rings, etc. and Analysis -- sequences, limits, continuity. I won't understand specialized engineering or business jargon.

Experience

I taught at a two-year college for 25 years, including all subjects from algebra to third-semester calculus.

Education/Credentials
-----------

©2012 About.com, a part of The New York Times Company. All rights reserved.