Question

You deposit ​$1000 in an account that pays 6​% interest compounded semiannually. After 3 ​years, the interest rate is increased to ​6.48% compounded quarterly. What will be the value of the account after a total of 6 ​years?

Answer 1

FV= $1,448.01

Explanation:

To calculate the future value of the investment, we need to use the following formula using both interest rates:

FV= PV*(1+i)^n

Interest 6% compounded semmiannually:

i= 0,06/2= 0.03

n= 2*3= 6 semesters

FV= 1,000*(1.03^6)

FV= $1,194.05

Interest 6.48% compounded quarterly:

i= 0.0648/5= 0.0162

n= 3*4= 12 quarters

FV= 1,194.05*(1.0162^12)

FV= $1,448.01