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Today you invested ​$21400 in an investment that pays 5​% and will mature in 3 years....

Today you invested ​$21400 in an investment that pays 5​% and will mature in 3 years. Once the investment​ matures, you will invest your funds for another 6 years in another investment that pays 3​%. What will be the value of your investment after 9 ​years?

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Answer #1

initial investment = I = $21400, Rate of interest for first investment of 3 years = R1 = 5%

Amount accumulated after 3 years in first investment = A = I (1 + R1)3 = 21400 (1 + 5%)3 = 21400 x (1.05)3 = 21400 x 1.157625 = 24773.175 = 24773.18 (rounded to two decimal places)

Rate of interest of second investment for next 6 years = R2 = 3%

Value of investment after 9 years = A (1 + R2)6 = 24773.18 (1 + 3%)6 = 24773.18 (1.03)6 = 24773.18 x 1.1940522 = 29580.47

Hence Value of investment after 9 years = 29580.47

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