Question

You deposit ​$1000 in an account that pays 8​% interest compounded semiannually. After 4 ​years, the interest rate is increased to 8.44​% compounded quarterly. What will be the value of the account after a total of 8 ​years?

Answer 1

$1,881.28

Explanation:

Using the compound interest formula, 1000 dollars 4 years with an interest of 8%, it will be 1360.49 dollars.

After 4 years, the principle becomes 1360.49 dollars, the interest rate becomes 8.44%, and you must calculate for 4 more years.

The final amount after 8 years is 1,881.28. The trick here is compounded separately in 2 parts.