Question

uiz 3 FI 320 1/24/19 Find the accumulated value of $4000 at the end of 5 years if the nominal rate of interest is 4% compounded quarterly for first 1.5 years, the effective (annual) rate of discount is 7% for the next 9 months, the nominal rate of discount is 6% compounded monthly for the next year, and the annual effective interest rate is 5% for the last 21 months.

Answer 1

pv = fv / (1+r)

note.

4% interest rate compounded quarterly for 1.5 year or 18 month (1+.04/12)¹⁸  

7% interest rate for 9 month     (1+.07/12)⁹

6% interest rate compounded monthly for 1 year or 12 month    (1+.06/12)12

5% interest rate  for 21 month    (1+.05/12)

As per above calculation we solve as following

$4000 = fv / (1+.04/12)¹⁸ + fv / (1+.07/12)⁹+ fv / (1+.06/12)¹²+ fv / (1+.05/12)²¹

FV = $4000 * (1.061730 + 1.0537418 + 1.06167781 + 1.0912438 )

FV = $17073.57 (approx)