Question

Suppose that you invest $100 in an account for 20n years. This account will credit you 5% annual effective rate of interest for the first 5 years, 5% annual effective rate of discount for the send 5 years, 5% simple interest for the third 5 years, and 5% simple rate of discount for the last 5 years. How much will you have at the end of the 20 years?

*hint use equations for from these chapters*

simple interest: P+Prt

compount: P(1+r)^t

simple discount: 1/(1-dt)

compound discount: 1/[(1-d)^t]

Answer 1

First 5 years	5% annual compounding	P*(1+r)^t	100*(1+5%)^5	$                           127.63
Next 5 years	5% annual discount	P/(1-d)^t	127.63/(1-5%)^5	$                           164.94
Next 5 years	5% simple interest	P+P*r*t	164.94+164.94*5%*5	$                           206.18
Next 5 years	5% simple discount	P/(1-d*t)	206.18/(1-5%*5)	$                           274.91