Multiple Choice - Financial Maths (1 Viewer)

[bellinda]

ok i know it sounds stupid but icant get this multiple choice.. and i know its only one mark so i shouldnt be fussing but its getting to me.. lol.. so if anyone could help it would be appriciated.



sei sei wins a jackpot prize in the lottary. she wishes to invest an amount of the moment in an invetsment account so she can withdraw $4000 every three months for the next 10 years. intrest on the account is compounded quartly at a rate of 12%p.a. at the end of 10 years nothing will be left in the account. how much money does Sei Sei need to invest now ?

(A) $22600.89
(B) $32443.58
(C) $79171.09
(D) $92456.09


thanx

 

[jayraad]

First we have to see which formula to use…so we do:

M= $4000
N= ??
r= 12%/4 = 3% (compounded quarterly)
n= 4 x 10 = 40 quarters in 10 yrs.

So we use the present value formulae.
(1+0.03)^40 - 1
---------------------- N = 4000
0.03(1+0.03) ^ 40

So solve N you put the equation on the left in the calculator which gives 23.11477197 & you times that by 4000 which gives you the answer (D).

Good luck and I hope that helped…Oww & im not sure if that is definitely right so if it isn’t pls somebody correct me. Thanks

 

[du4luv]

First we have to see which formula to use…so we do:

M= $4000
N= ??
r= 12%/4 = 3% (compounded quarterly)
n= 4 x 10 = 40 quarters in 10 yrs.

So we use the present value formulae.
(1+0.03)^40 - 1
---------------------- N = 4000
0.03(1+0.03) ^ 40

So solve N you put the equation on the left in the calculator which gives 23.11477197 & you times that by 4000 which gives you the answer (D).

Good luck and I hope that helped…Oww & im not sure if that is definitely right so if it isn’t pls somebody correct me. Thanks

Its correct, nice working...

 

[bellinda]

thanx guys...

big help

 

[PC]

The old Sei Sei question!

 

[bellinda]

what do u mean by that ?? lol ..

 

[PC]

People always get stuck on that! It's really just loan repayment question, but in the other direction. It's strange how it works out anyway.

Still ... good for practice!

 

[bellinda]

oh ok...


well im glad im not the only one to get lost by it.. lol..

still not sure if i get it.. lol..

 

[original123]

Good solving, but can I just give you two pointers?

a) VERY important to do multiple choice last. Do section II first if you don't already do that.

b) Also, you leave those multiple choice qs that require like 5 mins working out. If you don't have time, you guess them. It's the best way to go and has served me really well.

Good luck!