Question

Samuel invests £45 500 in an account that pays 4.5% compound interest per annum for the five years, then 3.5% . Work out how much money Samuel will have in his account in 13 years.

Answer 1

$74,664.76

Explanation:

We are to determine the future value of £45 500

The formula for calculating future value:

FV = P (1 + r)^n

FV = Future value

P = Present value

R = interest rate

N = number of years

Future value for the first 5 years = £45 500 x (1 + 0.045)^5 = $56,701.28

Future value for the remaining 8 years = $56,701.28 x ( 1 + 0.035)^8 = $74,664.76