Question

You make a $1,000 deposit to an investment account today. The investment earns 5% p.a compounding monthly for the first 12 months, then it earns 10%p.a compounding monthly for the next 3 years. At the end of the 4 years the balance in the account is (to the nearest whole dollar; don't use $ sign or commas)

Answer 1

Amount invested	$                               1,000.00
Interest rate	5%
Compounding	Monthly
Period in years	1
Amount=	Investment * (1+rate)^time
Amount after 1 year =	1000*(1+5%/12)^12
Amount after 1 year =	$                               1,051.16
Amount invested	$                               1,051.16
Interest rate	10%
Compounding	Monthly
Period in years	3
Amount=	Investment * (1+rate)^time
Amount after 3 year from year 1 i.e after 4 years =	1051.16*(1+10%/12)^(12*3)
Amount after 3 year from year 1 i.e after 4 years =	$                               1,417.16