Question

In: Finance

Find the accumulated value of $2,560 at the end of twelve years if the nominal interest...

Find the accumulated value of $2,560 at the end of twelve years if the nominal interest rate was 2% convertible monthly for the first three years, the nominal rate of discount was 3% convertible semiannually for the next two years, the nominal rate of interest was 4.2% convertible once every two years for the next four years, and the annual effective rate of discount was 0.058 for the last three years.

(Round your answer to the nearest cent.)

Expert Solution

The interest rate per month for the first three years will be:

The accumulated value at the end of three year will be:

The discount rate per half year will be:

The discount rate is used to calculate the present worth of a future amount by multiplying with given discount rate, but this can also be used to calculate future worth by simply dividing the current value with discount rate for the given time period.

So, the value at the end of 5th year will be:

The nominal interest rate per two year will be:

The accumulated value at the end of 9th year will be:

The value at the end of 12th year will be:

jeff jeffy answered 2 years ago

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