1. Mr. X wants to have birr 60,000 available 6 years from now for his masters degree study.

This will be accumulated by making equal deposits at the end of each month in his saving
account that bears 10% interest compounded monthly.
Required:
A. Find the amount of each deposit
Given: Let A be amount
A=60,000
t=6
m=12
r=0.1
Required: The amount of each deposit per month
Solution:
A=R ¿¿
A xi r
R=
¿¿ but i= m , n=mt
0.1
i= =0.0083 , n= 6x12=72
12
60,000 x 0.0083 498 =612.34
R=
¿¿ 0.8132

∴ The amount of each month’s deposit is 612.34

B. Find the total interest amount
Let x be the total amount of Birr deposited, then
x = the amount of each month’s deposit x total number of deposit periods
= 612.34 x 72
= 44,088.506
Then total interest = Total deposit with interest – total deposit
= 60,000 – 44,088.506
=15,912
∴ Thus the total interest at the end of the deposit period is
15,912