Asked by kat
You invest $1,000 at 4% compounded daily. Two years later you take the balance and place it into an account earning 4.5% compounded daily. Determine the value of your account three years after the 2nd investment.
Answers
Answered by
Henry
P1 = Po(1+r)^n.
r = 0.04/365 = 0.0001096/day.
n = 365Comp./yr. * 2yrs. = 730 Compounding periods.
P1 = 1000(1.0001096)^730 = $1083.28.
P2 = Po(1+r)^n.
Po = P1 = 1083.28.
r = 0.045/365 = 0.0001233.
n = 365Comp./yr. * 3yrs = 1095 Compounding periods.
P2 = Value after 3 yrs. = ?.
r = 0.04/365 = 0.0001096/day.
n = 365Comp./yr. * 2yrs. = 730 Compounding periods.
P1 = 1000(1.0001096)^730 = $1083.28.
P2 = Po(1+r)^n.
Po = P1 = 1083.28.
r = 0.045/365 = 0.0001233.
n = 365Comp./yr. * 3yrs = 1095 Compounding periods.
P2 = Value after 3 yrs. = ?.
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