In: Accounting
1. An engineer will deposit $8500 every semiannual(first deposit will be 2 years later) into a savings account that pays interest at a rate of 12% per year compounded monthly. How much will be in the account at the end of 10 years?
As the first payment is 2 years later, there will be 16 payments (8*2) made till the end of 10 years.
Interest Rate = 12% per year or 1% per month.
Effective Interest Rate for 6 months =
or Eff. Interest Rate (i) = 0.06152 or 6.152%
so, Number of Period (n) = 16
Payment amount (P) = 8,500
Interest Rate (i) = 0.0615
So, there will be $220,928.6 at the end of 10 years.