Question

Calculate the future value of quarterly payments of $1200 for 5 years, if the rate of interest was 10% compounded quarterly for the first 2 years and will be 9% compounded quarterly for the last 3 years.

Answer 1

I solved for both which i got

aFV= $10483.34
bFV= $16322.67
to get this answer i used this formula: FV=PMT((1+i)^n))-1/i

i just don't know what do i do now?

Answer 2

See answer to repost:
http://www.jiskha.com/display.cgi?id=1271904679

Answer 3

At the end of the first 2 years, the value of the payments up to that point will be
1200 ( 1.025^8 - 1)/.025 = 10483.339 (you had that)

let's "move" that up to the end of 5 years at the new rate
value = 10483.339(1.0225^12) = 13691.765

Amount of the last 3 years' payments at year 5
= 1200( 1.0225^12 - 1)/.0225 = 16322.666

so total amount = 16322.666 + 13691.765 = $30 014.43

Answer 4

Damon, didn't see that you already did this question.
Well, at least we agree down to the last penny, lol

Answer 5

Thank u soo much...u both really helped me at the right time...i have final exam tomorrow...and i am now prepared..thanks again!!!