SOLUTION: You deposit 3000 in an account that pays 7% interest compunded semiannually
After 4 years, the interest rate is increased to 7.16% compounded
quarterly. What will be the value o
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-> SOLUTION: You deposit 3000 in an account that pays 7% interest compunded semiannually
After 4 years, the interest rate is increased to 7.16% compounded
quarterly. What will be the value o
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Question 886898: You deposit 3000 in an account that pays 7% interest compunded semiannually
After 4 years, the interest rate is increased to 7.16% compounded
quarterly. What will be the value of the account in 8 years?
You can put this solution on YOUR website! you would calculate the future value of 3000 for 4 years at 7% compounded semi-annually.
that would be your first solution.
you would then calculate the future value of your first solution for the next 4 years at 7.16% compounded quarterly.
that would be your final solution.
the calculations would be as follows:
first calculation:
pv = 3000
i = 7%/100/2 = .035 for each semi-annual time period.
n = 4 * 2 = 8 semi-annual time periods.
fv = 3000 * (1.035)^8 = 3950.427111
second calculation:
pv = 3950.427111
i = 7.16/100/4 = .0179 for each quarterly time period.
n = 4*4 = 16 quarterly time periods.
fv = 3950.427111 * 1.0179^16 = 5247.179038
the value at the end of 8 years is 5247.179038
a time period by time period display of the cash flows is shown below:
the first 8 time periods are semi-annual. the last 16 time periods are quarterly.
