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.

1. 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