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To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.?
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To save for his sons college education Mr.anil decides to put Rs.3000 ...
Savings Plan:
Mr. Anil has decided to save for his son's college education by putting Rs. 3000 aside at the end of every 6 months. He plans to start this savings program when his son is 3 years old and continue until his son turns 21 years old.
Interest Rate:
The bank offers an interest rate of 8% compounded semiannually on savings accounts. This means that the interest is calculated and added to the account twice a year.
Calculating the Amount of Investment:
To calculate the amount of investment by the time his son is 21 years old, we need to determine the number of compounding periods and the future value of each investment.
Number of Compounding Periods:
Mr. Anil's son will be 21 years old after 18 years (21 - 3). Since he makes deposits every 6 months, there will be 2 compounding periods in a year. Therefore, the total number of compounding periods is 18 years multiplied by 2, which equals 36.
Future Value of Each Investment:
To find the future value of each investment, we can use the formula for compound interest:
Future Value = Principal Amount x (1 + (Interest Rate / Number of Compounding Periods))^(Number of Compounding Periods x Number of Years)
For each Rs. 3000 investment, the principal amount is Rs. 3000, the interest rate is 8% (or 0.08), the number of compounding periods is 2, and the number of years is 18.
Future Value = 3000 x (1 + (0.08 / 2))^(2 x 18)
Future Value = 3000 x (1 + 0.04)^36
Future Value = 3000 x (1.04)^36
Future Value ≈ 3000 x 2.2080404
Future Value ≈ Rs. 6,624.12
Total Investment Amount:
Since Mr. Anil makes this investment every 6 months, he will make a total of 36 investments over the 18 years (2 investments per year for 18 years). Therefore, the total investment amount can be calculated by multiplying the future value of each investment by the number of investments.
Total Investment Amount = Future Value x Number of Investments
Total Investment Amount = 6624.12 x 36
Total Investment Amount ≈ Rs. 2,38,067.2
Conclusion:
By the time his son is 21 years old, Mr. Anil's investment will have grown to approximately Rs. 2,38,067.2. This amount can be used to fund his son's college education.
Mr. Anil has decided to save for his son's college education by putting Rs. 3000 aside at the end of every 6 months. He plans to start this savings program when his son is 3 years old and continue until his son turns 21 years old.
Interest Rate:
The bank offers an interest rate of 8% compounded semiannually on savings accounts. This means that the interest is calculated and added to the account twice a year.
Calculating the Amount of Investment:
To calculate the amount of investment by the time his son is 21 years old, we need to determine the number of compounding periods and the future value of each investment.
Number of Compounding Periods:
Mr. Anil's son will be 21 years old after 18 years (21 - 3). Since he makes deposits every 6 months, there will be 2 compounding periods in a year. Therefore, the total number of compounding periods is 18 years multiplied by 2, which equals 36.
Future Value of Each Investment:
To find the future value of each investment, we can use the formula for compound interest:
Future Value = Principal Amount x (1 + (Interest Rate / Number of Compounding Periods))^(Number of Compounding Periods x Number of Years)
For each Rs. 3000 investment, the principal amount is Rs. 3000, the interest rate is 8% (or 0.08), the number of compounding periods is 2, and the number of years is 18.
Future Value = 3000 x (1 + (0.08 / 2))^(2 x 18)
Future Value = 3000 x (1 + 0.04)^36
Future Value = 3000 x (1.04)^36
Future Value ≈ 3000 x 2.2080404
Future Value ≈ Rs. 6,624.12
Total Investment Amount:
Since Mr. Anil makes this investment every 6 months, he will make a total of 36 investments over the 18 years (2 investments per year for 18 years). Therefore, the total investment amount can be calculated by multiplying the future value of each investment by the number of investments.
Total Investment Amount = Future Value x Number of Investments
Total Investment Amount = 6624.12 x 36
Total Investment Amount ≈ Rs. 2,38,067.2
Conclusion:
By the time his son is 21 years old, Mr. Anil's investment will have grown to approximately Rs. 2,38,067.2. This amount can be used to fund his son's college education.
Community Answer
To save for his sons college education Mr.anil decides to put Rs.3000 ...
TOTAL INVESTMENT=RS 1,08,000
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To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.?
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To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.?.
To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for To save for his sons college education Mr.anil decides to put Rs.3000 aside at the end of every 6months in a bank payment 8% interest compounded semiannually. If he begins the savings program when his son is 3years old,find the amount of the investment by the time his son is 21 years old.?.
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