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Johan will need R35 000 for his daughter’s first year’s university fees starting in 4 years’ time. How much money should he invest now, to provide for the first year of study if the interest rate is calculated at 18% per year, compounded annually?
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Future value, S, = 35 000

Time, T, = 4 years

Effective interest per year, R, = 18% = 0.18

Using the formula to find Present value, S = (1+ R)^T

Substituting into the formula

35 000 = P ( 1 + 0.18 ) ^ 4

35 000 = P (1.18)^ 4

P = 18 052. 61
by Wooden (2,782 points)
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