Time Value of Money, Financial Management

Two years ago, Randburg Ltd needed to accumulate a total of R250000 by the end
of 5 years to acquire new imported machinery. To do so Randburg Ltd makes
quarterly-annual deposits into a fund which earns 16% interest per annum
compounded quarterly. To date, the company has made eight equal quarterly
deposits into the fund. The cost of the machinery has just gone up to a total of R450
000 in three years’ time. However, Randburg Ltd can now earn 20% per annum
interest compounded semi-annually. All monies accumulated to date will from now
on earn a return of 20% per annum, interest compounded semi-annually. What is the
increased semi-annual deposit that Randburg Ltd will need to make instead of
quarterly payments, so that the fund will contain R450 000 in three years’ time?
Posted Date: 4/8/2013 10:29:23 AM | Location :

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