Question

Section 1: Short case studies (2marks each, total 10 marks) 1. Salman has only AED 70,000 today but needs AED 150,000 to buy a new dream car. How long will he has to wait to buy the car if she can earn 13 percent compounded annually on her savings? 2. Ali wants to have AED 70,000,000 in cash to buy a furnished apartment 5 years from today in JLT. She expects to earn 11 percent per year, compounded semiannually, on her secured investments. How much should she invest today to meet this purpose? 3. Amna wants to deposit $5000 into a saving fund at the beginning of each month. If she can earn 12% compounded interest semiannually how much amount will be there in her saving fund at the end of 8 years?

Answer 1

(1) Initial Savings = $ 70000, Final Target Future Value = $ 150000, Interest Rate = 13 % compounded annually,

Let the time required to reach the target future value be n years

Therefore, 70000 x (1.13)^(n) = 150000

(1.13)^(n) = 150000 / 70000 = 2.142857

n = = 6.2359 years ~ 6.24 years

log1.132.142857

NOTE: Please raise separate queries for soluions to the remaining unrelated questions as one query is restricted to the solution of only one compele question with up to four sub-parts.