Question
In: Finance
You deposit $1000 in an account that pays 8% interest compounded semiannually. After 5 years, the...
You deposit $1000 in an account that pays 8% interest compounded semiannually. After 5 years, the interest rate is increased to 8.12% compounded quarterly. What will be the value of the account after a total of 10 years?
Solutions
Expert Solution
FV = PV(1 + r)^t
At 8% interest:
Value after 5 years = $1000[1 + (0.08/2)]^(5 * 2) = $1,480.244
At 8.12% interest:
Value after 5 years = $1,480.244[1 + (0.0812/4)]^(5 * 4) = $2,212.54
jeff jeffy answered 2 years agoRelated Solutions
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