Question

Mapuleng deposits R1 500 at the end of every month into an account that earns 12,5% interest per year, compounded monthly. After two years, she stops making these 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

Answer 1

$A\ =P\left(1\ +\ \frac{r}{n}\right)^{n\ast t}$

$A\ =1500\left(1\ +\ \frac{0.125}{12}\right)^{12\ast2}$

$A = \ R1,923.55 \ \ for \ the \ first \ 2 \ years$

$A\ =1500\left(1\ +\ \frac{0.15}{6}\right)^{6\ast2}$

$A = \ R 2,017.33 \ \ \ for \ the \ next \ 2 \ years$

$1923.55 \ + \ 2017.33\ = \ 3940.88$

The balance after 4 years will be $R3,940.88$