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John invested $45 000 in the investment account that pays an interest rate of 17.75%p.a. compounding bi-annually for 10 years. After five and half years from the investment starting date, the interest rate changed from 17.75% to 18.25% p.a. compounding quarterly apply the formula, E=A (1+i/100)^n. what will be the compound amount will John have after 10 years

User Audra
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1 Answer

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I will rewrite the formula on my own way.
The formula is
A=p (1+r/k)^kt
A future value?
P present value 45000
R interest rate 0.1775
K bi-annually 2
T time 5.5 years for the first period
A=45,000×(1+0.1775÷2)^(2×5.5)
A=114,662.75225375

Now use the formula again where the present value is 114,662.75225375 and the interest rate is 18.25% compounded quarterly (4).
The time of the rest of the period is 4.5 years (10-5.5)

A=114,662.75225375×(1+0.1825÷4)^(4×4.5)
A=255,970.32....answer
User Joerg
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