Question

If you deposit 100, 200, and 500 at the end of periods 2, 4, 6 respectively in an account that pays 10% compounded annually during the first two periods, 8% compounded annually in periods 3, 4, and 5, and 12% compounded annually in every period thereafter, how much would you have in the account at the end of period 8?

Please provide solution with steps and explanation

Answer 1

• Notes:

---Amount is invested at the end of period, hence interest will be earned on that invested amount from next period.
---First deposit is at the end of period 2. Interest rate for first 2 period = 10% No interest will be earned for first 2 period as there was no investment.
---Interest earned is rounded of 2 decimal places.

• Full complete working for the amount at the end of 8^th period

Period	Beginning Investment balance	Interest earned during the period	Amount invested at the end of period	Ending Balance of Investments
	[A]	[B = A x Interest rate]	[C]	[A + B + C]
1	$                          -	$                                    -	$                           -	$                                -
2	$                          -	$                                    -	$                  100.00 (first deposit)	$                       100.00
3	$                 100.00	$                               8.00 (at 8%)	$                           -	$                       108.00
4	$                 108.00	$                               8.64 (at 8%)	$                  200.00 (second deposit)	$                       316.64
5	$                 316.64	$                             25.33 (at 8%)	$                           -	$                       341.97
6	$                 341.97	$                             41.04 (at 12%)	$                  500.00 (third deposit)	$                      883.01
7	$                 883.01	$                           105.96 (at 12%)	$                           -	$                       988.97
8	$                 988.97	$                           118.68 (at 12%)	$                           -	$                   1,107.64

• Hence, at the end of Period 8, The account will have a Balance of $ 1,107.64