Question

Question 11 of 13 The interest rate for a savings fund was 3.50% compounded semi-annualy for the first 5 years and then 4.70% compounded semi-annualy for the second 5 years. Harsha invested $2,500 at the end of each 6 months for 10 years. stion 6 (1) estion 7 (1) estion 8 (2) estion 9 (1) estion 10 (2) estion 11 (3) uestion 12 (1) uestion 13 (1) a. Calculate the accumulated value of her investment after the first 5 years. 50 00 Round to the nearest cent 07 b. Calculate the accumulated value of her investment at the end of 10 years. COSE DATE March 26th 09.00 pm 50.00 Round to the nearest cent Submit Save Progress c. How much interest did she earn in her investment over the 10 years. Round to the nearest cente

Answer 1

First 6 years

Value of Annuity =

(1+r)n-1 Periodic Payment *

where r is the rate of Return for compounding period = 3.5% /2 = 0.0175 _ _ _ (Semi Annual)

n is the no of compounding period 5 years * 2 = 10

=

2500+一 (1+0.0175) 10 -1 0.0175

= 27063.4986227

Answer B)

Value of 27063.4986227 after 10 years = 27063.4986227 (1+4.70%/ 2)^10

= 34139.9129251

Value of Annuity for later 6 years

Value of Annuity =

(1+r)n-1 Periodic Payment *

where r is the rate of Return for compounding period = 4.7% /2 = 0.0235 _ _ _ (Semi Annual)

n is the no of compounding period 5 years * 2 = 10

=

2500 ** (1+0.023510_1 10,0235

= 27816.4343297

Total Value of 12 years = 34139.9129251 + 27816.4343297 = 61956.35

Total Interest = 61956.35 - 2500 * 24 = 1956.35

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