Question #306612

Mapuleng deposit 1500 at the end of every month into an account that earns 12.5% interest per year,compounded monthly. After two years, she stops making this monthly contributions because the interest rate changes to 15% per year compounded every two months. if no withdrawals or deposits are made for four years the balance in the account will be


1
Expert's answer
2022-03-07T17:00:01-0500

Solution


Given that

Number of years     t=2t=2

Number of times, the interest was compounded per year      n=12n = 12 (monthly compounded)

Interest rate r=12.5%r = 12.5\% (annually)

Interest rate r12=12.5%12=1.0416%\frac {r}{12} =\frac{12.5\%}{12}= 1.0416\% (monthly)

Monthly deposit     P=1500P = 1500

For two years, the number of times, the interest was compounded = 24 


After two years, the interest rate is r=15%r=15\%


Using excel, the future value after four years is calculated as






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