SOLUTION: An investment of $2500 earns interest at 4.5% p.a. compounded monthly for three years. At that time the interest rate is changed to 5% compounded quartly. How much will the accumul
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-> SOLUTION: An investment of $2500 earns interest at 4.5% p.a. compounded monthly for three years. At that time the interest rate is changed to 5% compounded quartly. How much will the accumul
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Question 1129178: An investment of $2500 earns interest at 4.5% p.a. compounded monthly for three years. At that time the interest rate is changed to 5% compounded quartly. How much will the accumulated value be one and half years after the change. Answer by Theo(13342) (Show Source):
first time is for 2500 at 4.5% compounded monthly for 3 years.
second time is for the future value of the first time for at 5% compounded quarterly for one and a half years.
your inputs for the first time are:
present value = 2500 (shown as negative because it's money going out).
future value = 0.
number of time periods = 3 years * 12 months per year = 36 months.
payment in each time period is 0.
interest rate per time periods = 4.5% per year / 12 months per year = .375% per month.
payments made at end or beginning of each time period doesn't matter since the payments in each time period are 0.
you click on fv and you get the future value equal to 2860.62 (shown as positive because it's money coming in).
your inputs for the second time are:
present value - 2860.62 (shown as negative because it's money going out).
future value = 0
number of time periods = 1 and 1/2 years * 4 quarters per year = 6 quarters.
payment in each time period is 0.
interest rate per time period = 5% per year / 4 quarters per year = 1.25% per quarter.
payments made at end or beginning of each time period doesn't matter since the payments in each time period are 0.
you click on fv and you get the future value equal to 3081.98 (shown as positive because it's money coming in).
the accumulated value 1 and 1/2 years after the change is 3081.98.
