Question

. I saved $3,500 per six month period for seven years into my savings account earning 2% compounded annually. After the seven years, I stopped making contributions, but left the money in the bank for another five years, at 2.4% compounded annually.

- How much do I have in my account at the end of this twelve year period?

b) How much interest did I earn over the 12 year period?

Calculate using ba 2 plus calculator

Answer #1

ans a) | Effective annual interest rate = | 2.00% | ||

Interest rate compounded semiannual | ((1+2%)^(1/2)-1)*2 | |||

Interest rate compounded semiannual | 1.990% | |||

monthly rate = 1.99%/2 | 0.995% | |||

we have to use finanical calculator to solve this | ||||

Put in calculator, set the calculator at BEGIN mode | ||||

PV | 0 | |||

PMT | -3500 | |||

I | 0.995% | |||

N | 7*2 | 14 | ||

Compute FV | $52,298.90 | |||

Future value at 12 year | ||||

Put in calculator | ||||

PV | ($52,298.90) | |||

PMT | 0 | |||

I | 2.40% | |||

N | 5 | |||

Compute FV | $58,883.32 | |||

ans = | $58,883.32 | |||

Ans b) | ||||

Total amount of interest earned = | $9,883.32 | |||

58883.32-3500*7*2 |

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