Posted by Jean on .
Lee Holmes deposited $ 15,000 in a new savings account at 9% interest compounded semiannually, At the beginning of year 4, Lee deposites an additional $40000 at 9% interest compounded semiannually. At the end of the 6 years what is the balance in Lee;s account
Business Math -
P1 = Po(1+r)^n.
P1 = Principal after 1st 3 years.
Po1 = $15,000 = Initial deposit @ beginning of the 1st 3 years.
r = (9%/2)/100% = 0.045 = Semi-annual %
rate expressed as a decimal.
n = 2Comp/yr * 3yrs = 6 Compounding
Solve the given Eq and get:
P1 = $19,533.90.
P2 = Po2(1+r)^n.
P2 = Principal amount after the 2nd 3 years.
Po2 = 19,533.90 + $40,000 = $59,533.90
= Initial deposit for 2nd 3 years.
Solve for P2.
Answer: P2 = $77,528.63.
NOTE: r,and n are the same for both P1 and P2 calculations.