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October 30, 2014

October 30, 2014

Posted by **yenny** on Sunday, April 17, 2011 at 2:00pm.

- math -
**MathMate**, Sunday, April 17, 2011 at 3:35pm$3000 at 2% for 3 years, followed by 3% for 3 years, all compounded quarterly.

The basic equation for the future value A (accumulated amount) of a principal P at r% interest per period for n periods is:

A=PR^n

where R=1+r

At the end of the three years at 2%, the amount is reinvested at 3%, so the calculated A becomes P for the second part.

First three years:

No. of periods, n = 4*3 = 12 quarters

interest per period, 1+2%/4=1.005

Principal = $3000

Amount at the end of three years:

A = PR^n = 3000*1.005^12

= 3000*1.06168

= $3185.03

For the second part,

P=$3185.03

R=1+3%/4=1.075

n=12

A=PR^n=3185.03*1.075^12=?

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