Hi, how would you do questions 30 and 31 (sorry that they're such large questions but i'm realy stuck)?
Hey! For the first question, we literally just sub in the relevant values;
(500)=$560)
From here, it gets a bit trickier. We need to find a nice pattern. Let's look at what happens in the third year, but without using the VALUE of the instalment, but rather using the relationship
M_2=(1+\frac{12}{100})(1+\frac{12}{100})(500))
Can you see a pattern? In the nth year, we find that
^{n-1}(500))
Now, letting n=20, we get $4306.38 (as required)
For the last part, we need to create a sum. This will look like
+500(1+\frac{12}{100})^2+...500(1+\frac{12}{100})^{n-1})
^2+...+(\frac{112}{100})^{n-1}))
We use the sum of a geometric series to find that
^2+...+(\frac{112}{100})^{n-1}=\frac{1(1-\frac{112}{100}^n)}{1-\frac{112}{100}})
Sub in n=20, and you get the correct answer out! Try using this approximate working out to get 31, and if you're still struggling we can walk you through it