Q1.
A. Monthly interest rate = 6%/12 = 0.5%
Compound interest factor = ((1 + i)n – 1) / i = ((1+0.5%)120 – 1)/0.5% = 163.88 , (for 10 years, numbe rof monthly time periods = 10*12 = 120
Fund value at the end of 10 years = 1000*163.88 = 163,880
B. Monthly interest rate = 8%/12 = 0.67%
Compound interest factor = ((1 + i)n – 1) / i = ((1+0.67%)120 – 1)/0.5% = 182.95 , (for 10 years, numbe rof monthly time periods = 10*12 = 120
Fund value at the end of 10 years = 1000*182.95 = 182,950
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