Question

can anyone help me out with this? maybe show excel or factor calculator instructions.

1. Joan Smith invested $15,000 into an account in First Grand Rapids Bank on July 1, 2005. At that time, the bank was paying a nominal interest rate of 3% a year compounded semi-annually. From January 1, 2011, the bank increased its nominal rate to 4% compounded quarterly on all the accounts. Because of the increase in interest being paid, Joan deposited an additional $5,000 into her original account. If Joan closes out her account on October 1, 2017, how much will she get?

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

A BLUE HT answer Firstly we have to calculate the number of years from july 1, 2005 to january 1,2011 = 5.5 years That means since interest in semi annual compounding from this period, so number of compoundings = 5.5 * 2 = 11 compoundings So value of account as january 1,2011 = intial investment *(1+i/2))^n = 15000*(1+(3%/2)^11 = 15000*1.177949 = $ 17669.23 Now we have to calculate the number of years from january 1, 2011 to october 1, 2017 = 6.75 years Since the interest is quarterly coumpounding, so number of compounding = 6.75*4 = 27 compoundings So value of account as on october 1, 2017 = (value as on 1 january,2011 + additional investment)*(1+i/4))^n = (17669.23+5000)*(1+(4%/4))^27 = 22669.23*1.308209 = $ 29656.09 Thus the correct answer value of account as on 1 october, 2017 is - $ 29656.09