Question

This Question: 4 pts 15 of 15 (complete An Investment of 52400 same interesa per annum compounded away for four years that time the Interest rate is changed to compounded worly How much the same value be three years to the change? The accumulated value is (Round the final answer to the nearest cant as needed. Round all intermediate values to decimal places as needed)

Answer 1

Solution:-

Given that,

An investment of $2400 earns interest rate of 4.1% compounded annually for four years.

Let A be the total amount after 4 years, we have

A = P(1+r/n)^(nt)

Where,

P = the principal investment amount

r = the annual interest rate

n = the number of times that interest is compounded per unit t

t = the time the money is invested

Now,

A = 2400 ( 1 + 0.041 / 1 ) ^ ( 1×4 )

A = 2400 (1.041) ^ (4)

A = 2818.474823

Now, the interest rate is changed to 4.9% quarterly for three years

Let A' be the final amount after 3 years

A' = A(1+r/n)^(nt)

A' = (2818.474823)(1+0.049/4)^(4×3)

A' = (2818.474823)(1.01225)^(12)

A' = 3261.88

Therefore, the accumulated value is $3261.88