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| Math Central | Quandaries & Queries |
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Question from George, a student: To save for his daughter's university education at the end of each month Mr McLean sets aside £50 in a savings scheme paying 10% p.a. compounded monthly. He begins saving when his daughter is 3 years old. How much will he have saved by the time his daughter is 18? |
George,
If you are expected to use the standard formula to solve this problem then here is the formula
where S is the value at the end of the time period, R is the amount of the monthly deposit, i is the interest rate per period (for your question i = 0.10/12) and n is the number of periods (number of months).
If you are to answer this from first principles, without the formula, write back.
Harley
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