Answer to Question #271966 in Financial Math for Ryan

Question

Refer to this information. Calculate the future value of a 4 year investment of R13270 at an interest rate of 6.09% per annum compounded quarterly. 

If the interest rate changes at the end of the second year from 6.09$ per annum compounded quarterly to 7.54% per annum compounded quarterly, the accumulated value of the original investment of R13270 at the end of 4 years will be.. 

Answer 1

$FV = PV(1 + r/m)^{mt}$

1.

$FV = 13270(1 + 0.0609/4)^{4\cdot4}=R\ 16899.26$

2.

at the end of the second year:

$FV = 13270(1 + 0.0609/4)^{2\cdot4}=R\ 14975.09$

at the end of 4 years:

$FV = 14975.09(1 + 0.0754/4)^{2\cdot4}=R\ 17388.07$