TIME VALUE OF MONEY

Two years ago Spark LTD needed to accumulate a total of R250000 by the end of 5 years to aquire a new imported machinery. To do so Spark LTD makes quarterly anual deposits into a fund which earns 16% interest per annum compounded quarterly. To date the company has made 8 equal quarterly deposits into a fund. The cost of the machinery has just gone up to a total of R450 000 in three years time. However Spark LTD can now earn 20% per annum, interest compunded semi-annually. WHAT IS THE INCREASED SEMI-ANNUAL DEPOSIT THAT Spark LTD will need to make instead of of quarterly payments so that the fund will contain R450 000 in three years’ time? 20 Marks