Asked by Ethan Skarzenski on May 16, 2024
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Dave Bidini has saved $20,000 for a down payment on a home and plans to save another $5,000 at the end of each year for the next five years. He expects to earn 7.25% compounded annually on his savings. How much will he have in five years' time? (Taken from CIFP course materials.)
Compounded Annually
Interest that is calculated once a year and added to the principal, meaning each year's interest earns interest in subsequent years.
CIFP Course Materials
Educational resources and texts provided for the Certified Islamic Finance Professional (CIFP) program, covering Islamic financial principles and practices.
- Examine the effects of varying interest rates and compounding intervals on the expansion of savings and investment schemes.
- Calculate the significance of ongoing contributions to savings programs over a period, with consideration for compound interest.
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Learning Objectives
- Examine the effects of varying interest rates and compounding intervals on the expansion of savings and investment schemes.
- Calculate the significance of ongoing contributions to savings programs over a period, with consideration for compound interest.