Question

An investment of $31 700 is accumulated at 4.24% compounded quarterly for three and one-half years....

An investment of $31 700 is accumulated at 4.24% compounded quarterly for three and one-half years. At that time the interest rate is changed to 6.12% compounded monthly. How much is the investment worth two years after the change in interest rate?

Homework Answers

Answer #1

Given that,

Initial investment PV = $31700

interest rate for 1st t = 3.5 years r = 4.24% compounded quarterly

So, accumulated value of the fund at the year 3.5 using compounding is

Accumulated value = PV*(1 + r/n)^(n*t)

For quarterly compounding, n = 4

=> Accumulated value at year 3.5 = 31700*(1+0.0424/4)^(4*3.5) = $36742.56

then interest rate changed to 6.12% compounded monthly

So, future value after 2 years is

FV = Accumulated value at 3.5 year*(1+r/n)^(n*t)

for monthly compounding n = 12

=> Future value FV = 36742.56*(1+0.0612/12)^(12*2) = $41513.75

So, Investment is worth $41513.75

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An investment of $41 700 is accumulated at 7.24% compounded quarterly for three and one-half years....
An investment of $41 700 is accumulated at 7.24% compounded quarterly for three and one-half years. At that time the interest rate is changed to 6.12% compounded monthly. How much is the investment worth two years after the change in interest rate?
An investment of ​$4885.45 earns interest at 4​% per annum compounded semi-annually for 4 years. At...
An investment of ​$4885.45 earns interest at 4​% per annum compounded semi-annually for 4 years. At that time the interest rate is changed to 7.2% compounded quarterly. How much will the accumulated value be 4.5 years after the​ change? The accumulated value is ​$. ​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)
You have deposited $10,000 in a bank earning interest at 7% p.a. compounded quarterly for four...
You have deposited $10,000 in a bank earning interest at 7% p.a. compounded quarterly for four years and five months. At that time, the interest rate changes to 6% p.a. compounded monthly. What is the value of the deposit three years after the change in the rate of interest? What nominal annual rate compounded quarterly is equivalent to 7.5% p.a. compounded monthly? You have decided to deposit $500 in the Montreal bank at the end of each quarter for seven...
Find the accumulated value of an investment of $ 25,000 for 3 years at an interest...
Find the accumulated value of an investment of $ 25,000 for 3 years at an interest rate of 7% if the money is a. compounded​ semiannually b. compounded​ quarterly c. compounded monthly d. compounded continuously.
You have deposited $10,000 in a bank earning interest at 7% p.a. compounded quarterly for four...
You have deposited $10,000 in a bank earning interest at 7% p.a. compounded quarterly for four years and five months. At that time, the interest rate changes to 6% p.a. compounded monthly. What is the value of the deposit three years after the change in the rate of interest?
PART 2: FINANCE a) If you deposit $23,596.00 at 13.23% annual interest compounded quarterly, how much...
PART 2: FINANCE a) If you deposit $23,596.00 at 13.23% annual interest compounded quarterly, how much money will be in the account after 4 years? b) If you deposit $1036.00 into an account paying 5.46% annual interest compounded monthly, how many years until there is $19,912.00 in the account? c) What is the value today of receiving a single payment of $55,961.00 13 years if your required rate of return on this investment is 14.25% compounded semi-annually? d) If you...
a) A person borrows $6650.00 with interest at 15.5% compounded quarterly for 4 years 7 months....
a) A person borrows $6650.00 with interest at 15.5% compounded quarterly for 4 years 7 months. If simple interest is used for part of an interest conversion period, how much is required to pay off the debt at the end of 4 years 7 months? b)A person invests $7500.00 at 6.75% compounded semiannually on October 1, 2018. If simple interest is allowed for part of an interest conversion period, how much is the investment worth June 1, 2022? c) On...
1)Hewlett Plastics Inc. received a loan of $60,000 at 3.75% compounded quarterly to purchase machinery for...
1)Hewlett Plastics Inc. received a loan of $60,000 at 3.75% compounded quarterly to purchase machinery for its factory. Calculate the time period of the loan if the total interest paid was $32,165.48. 2)How long would it take for an investment to double its original amount at 3.62% compounded monthly? 3)Calculate the effective interest rate for each of the following nominal interest rates: a. 2.16% compounded quarterly. Round to two decimal places b. 2.16% compounded monthly. 4)Lucy invested $210,000 to purchase...
1a) Lucy invested $950 five years ago. Her investment paid 7.2% interest compounded monthly. Lucy's twin...
1a) Lucy invested $950 five years ago. Her investment paid 7.2% interest compounded monthly. Lucy's twin sister Laurie invested $900 at the same time. But Laurie's investment earned 8% interest compounded quarterly. How much is each investment worth today? 1b) Carl is considering the purchase of an investment that will pay him $12,500 in 12 years. If Carl wants to earn a return equal to 7% per year (annual compounding), what is the minimum amount he should be willing to...
Q3) How many years would it take an investment of $333 to grow to $10,789 at...
Q3) How many years would it take an investment of $333 to grow to $10,789 at an annual rate of return of 11.00%? Q4) How much money would you need to deposit today at 23.00% annual interest compounded monthly to have $26,802 in the account after 13 years? Q5) If you deposit $729 into an account paying 15.00% annual interest compounded quarterly, how many years until there is $37,847 in the account? Q6) If you deposit $21,114 at 06.00% annual...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT