You invest $1000 today. If that money grows at an annualized rate of 2% for the...

You invest $1000 today. If that money grows at an annualized rate of 2% for the next 7 months and then at an annualized rate of 16% for the next 3 months after that, how much will your investment grown to by the end of the 2nd period. Assume you made no withdrawals or additional investments.

Expert Solution

Compute the monthly rate for first 7 months, using the equation as shown below:

Monthly rate = Annual rate/ 12 months

= 2%/ 12 months

= 0.16666666666%

Hence, the monthly rate is 0.16666666666%.

Compute the value of investment after 1^st period, using the equation as shown below:

Hence, the value of the investment after 1^st period is $1,011.72516222.

Compute the monthly rate for last 3 months, using the equation as shown below:

Monthly rate = Annual rate/ 12 months

= 16%/ 12 months

= 1.33333333333%

Hence, the monthly rate is 1.33333333333%.

Compute the value of investment after 2^nd period, using the equation as shown below:

Hence, the value of the investment after 2^nd period is $1,052.7361536.

jeff jeffy answered 2 years ago

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