You deposit $2,000 in an account that pays 8% interest compounded semiannually. After 4 years, the interest rate is increased to 8.28% compounded quarterly. What will be the value of the account after 4 more years? (Do not round until the final answer. Then, round to the nearest cent.)

Answer 1

Pt = Po(1+r)^n.

r = (8%/2) / 100% = 0.04 = Semi-annual
% rate expressed as a decimal.

n = 2 comp./yr * 4yrs = 8 Compounding
periods.

Pt = 2000(1.04)^8 = 2737.138101 after 4 yrs.

r = (8.28%/4) / 100% = 0.0207 = QPR
expressed as a decimal.

n = 4 comp./yr * 4 yrs.=16 Compounding periods.

Pt = 2737.138101(1.0207)^16 = $3798.98.

Answer 2

You deposit $1000 in an account that pays 6% interest compounded semiannually. After 3years, the interest rate is increased to 6.44% compounded quarterly. What will be the value of the account after a total of 6 years?