math

posted by yenny

An amount of \$3000 was deposited in a bank at a rate of 2% annual interest compounded quarterly for 3yrs. The rate then increased to 3% annual interest and ws compounded quarterly for the next 3 yrs. If no money was withdrawn what was the balance at the end of this time?

1. MathMate

\$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=?

Similar Questions

1. math

find the effectivee rate correspoding to 3% compounded quarterly The formula for effective rate I found is (1+ i/n)^n - 1 where i is the annual rate as a decimal and n is the number of periods. Here i=.03 so the effective rate is and …
2. Math - Compound

If a bank offers interest at a nominal rate of 6%, how much greater is the effective rate if interest is compounded continuously than if the compounding is quarterly?
3. Math

Find the amount of money in an account after 12 years if \$1000 is deposited at 5% annual interest compounded quarterly.
4. math

Find the amount of money in an account after 12 years if \$1000 is deposited at 5% annual interest compounded quarterly.
5. Math

If 3000 dollars is invested in a bank account at an interest rate of 6 per cent per year, find the amount in the bank after 12 years if interest is compounded annually Find the amount in the bank after 12 years if interest is compounded …
6. Finance

john deposited 3000 into an account with 5% annual interest rate compounde quarterly at the beginning of 2011. the bank guarantees that 5% annual interest rate for the next 10 years if john deposits 3000 every two years. assume that …
7. College Algebra

bank a is lending money at 5.7% interest compounded annually. The rate at bank b is 5.6% compounded monthly, and the rate at bank C is 5.65% compounded quarterly. Which bank will you pay the least interest?
8. Mathematics and investment

1. Angelo wants to renovate his house in 3 years. He estimates the cost 300,000. How much must Angelo invest now at 8% compounded quarterly in order to have 300,000 3 years from now. 2. Angelo Ancis want to save 500,000 in 5.5 years …