Question

At the end of two consecutive investments you have $18,510.10. Investment one was 4% (SA) for 30 months Investment two was 9% (Q) for 15 months What was the original amount deposited? Round to the nearest WHOLE dollar, NO dollar ($) signs, Use commas (,) when and where needed

Answer 1

Let the original investment be $100. Thus nper = 30/12*2 = 5 semi annual periods; rate = 4%/2; PV = 100.

Amount at the end of the 1st investment: FV (4%/2, 5, 0, -100) = $110.41

Now PV for investment 2 = 110.41; nper = 15/12*4 = 5 quarterly period; rate = 9%/4.

Amount at the end of 2md investment: FV (9%/4; 5, 0, -110.41) = $123.40

However we want FV at the end of the 2nd investment to be $18,510.10. We can use the "goal seek" function and excel and set the cell pertaining the value of $123.40 to $18,510.10 by changing the value of the cell that has the value of $100.

The goal seek function gives a value of 15,000.

Thus the answer is 15,000.