Ask questions and get helpful answers.

You deposit $2,000 in an account that pays 8% interest compounded semiannually. After 4 years, the interest rate is increased to 8.28% compounded quarterly. What will be the value of the account after 4 more years? (Do not round until the final answer. Then, round to the nearest cent.)

  1. 👍
  2. 👎
  3. 👁
  4. ℹ️
  5. 🚩

2 answers

  1. Pt = Po(1+r)^n.

    r = (8%/2) / 100% = 0.04 = Semi-annual
    % rate expressed as a decimal.

    n = 2 comp./yr * 4yrs = 8 Compounding
    periods.

    Pt = 2000(1.04)^8 = 2737.138101 after 4 yrs.

    r = (8.28%/4) / 100% = 0.0207 = QPR
    expressed as a decimal.

    n = 4 comp./yr * 4 yrs.=16 Compounding periods.

    Pt = 2737.138101(1.0207)^16 = $3798.98.

    1. 👍
    2. 👎
    3. ℹ️
    4. 🚩
  2. You deposit $1000 in an account that pays 6% interest compounded semiannually. After 3years, the interest rate is increased to 6.44% compounded quarterly. What will be the value of the account after a total of 6 years?

    1. 👍
    2. 👎
    3. ℹ️
    4. 🚩

Answer this Question

Related Questions

Still need help?

You can ask a new question or browse existing questions.