Question

Y is placed in an account which caries a nominal annual interest rate of 2.4% compounded...

Y is placed in an account which caries a nominal annual interest rate of 2.4% compounded quarterly for the first 10 years and a nominal annual discount rate of 3.6% convertible monthly for the next 5 years. The value of this account 15 years after inception is $10000. Find Y

Homework Answers

Answer #1
Compounding  
A P*(1+r)^n
Y Principal
n number of compunding
r Rate of intrest for compunding period
A Resulting amount at end
in given question
A= 10000$
here two different interest rates and compunding factors are there
we have to find out "p"
year computation discounting factor n r
`1-10 1/(1+0.006)^40 0.7871922 `10*4=40 `0.024/4=0.006 Quarterly for 10 years
`11-15 1/(1+0.003)^60 0.8354953 `5*12=60 `0.036/12=0.003 monthly for 5 years
Y `=A/(1+r)^n
`10000/((1.006^40)*(1.003^60))
$6,576.95
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