You deposit $1000 in an account that pays 8% interest compounded semiannually. After 2 years, the interest rate is increased to 8.40% compounded quarterly. What will be the value of the account after 4 years?

Answer 1

Pt = Po(1+r)^n.

r = Rate per compounding.
n = The # of compounding periods.

2 yrs @ 8% + 2 yrs @ 8.4%.

Pt = !000(1.04)^4 + Po2(1.021)^8,
Pt = 1169.8586 + 1169.8586(1.021)^8,
Pt = 1169.8586 + 1381.4631 = $2551.32.