Thursday, December 15, 2011

Help Please?

When Molly was born, her father deposited $2,000 in her name at a bank. At the time that the bank was paying 6% interest compounded semiannually. After 10 years the bank changed to an interest of 6% compounded quarterly. How much had the $2,000 amounted after 18 years when the money is withdrawn for Molly to use to pay for her college expenses?|||2000*[(6%/2)+1]^(2*10)*[(6%/4)+1]^[(18-1鈥?br>

since everything's compounded, just multiply it all.|||This one isn't too hard. It's a two part question so split it up into the first balance which compounds semiannualy and then take the first balance and compound it at a quarterly rate.





For the first period, year 1 through year 10 the equation is like this:





First Balance = $2000*(1+0.06/2)^20





the second half starts at the end of year 10 and goes through the end of year 18 which is a total of 8 years:





Final Balance = First Balance * (1+0.06/4)^32





Easy!!! Good Luck!~!

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