Question

A woman deposited $ 1000 in her bank account. The money remained on the account for 10 years. During the first 5 years, the monthly compound processed an annual nominal 15% interest. After this period, the bank changed its interest policy and quarterly compound processed 18% nominal interest rate annually. Calculate the money accumulated in the account after 10 years.

Answer 1

We are given the following information:

Value of account at time 0	PV	1000
rate of interest for first five years	r	15.00%
rate of interest for first next years	s	18.00%
number of years when r = 15%	n	5
number of years when s = 18%	m	5
Future value	FV	To be calculated

We need to solve the following equation to arrive at the required FV

So the accumulated amount is $4601.50