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Finance

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You deposit $1000 in an account that pays 8% interest compounded semiannually. After 2 years, the interest rate is increased to 8.40% compounded quarterly. What will be the value of the account after 4 years?

  • Finance -

    Pt = Po(1+r)^n.

    r = Rate per compounding.
    n = The # of compounding periods.

    2 yrs @ 8% + 2 yrs @ 8.4%.

    Pt = !000(1.04)^4 + Po2(1.021)^8,
    Pt = 1169.8586 + 1169.8586(1.021)^8,
    Pt = 1169.8586 + 1381.4631 = $2551.32.

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