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Madimpho has R1 500 000 in her company’s retirement account. However, she is now changing jobs and wants to transfer her retirement funds into a new account. She also wants to invest R30 000 per quarter into the new account until her retirement, 20 years from now. If the new account earns an interest of 8% per annum compounded quarterly. How much will she have when she retires?
in QMI1500 by Diamond (41.3k points) | 13 views

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For first investment: P = 1 500 000;    R = 0.08/4 = 0.02;    T = 4 x 20 = 80

Future value = S = P((1 + R)^T) = 1 500 000((1 + 0.02)^80) = 7 313 158.73

For second investment: R = 30 000;    T = 20;    i = 0.08/2 = 0.02;    n = 4 x 20 = 80

S = R((((1 + i)^n) - 1) / i) = 30 000((((1 +0.02i)^80) - 1) / 0.02) = 5 813 158.73

Therefore the amount accumulated over twenty years as the sum of the two investments is 7 313 158.73 + 5 813 158.73 = R13 126 317.46
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