Question

The interest rate for a savings fund was 3.40% compounded semi-annualy for the first 6 years and then 4.90% compounded semi-annualy for the second 6 years. Harsha invested $2,650 at the end of each 6 months for 12 years. a. Calculate the accumulated value of her investment after the first 6 years.

Answer 1

a.

accumulated value

=2650*(((1+(3.40%/2))^(6*2)-1)/(3.40%/2))

=34948.41

b.

accumulated value

=2650*(((1+(3.40%/2))^(6*2)-1)/(3.40%/2))*(1+(4.90%/2))^(6*2)+2650*(((1+(4.90%/2))^(6*2)-1)/(4.90%/2))

=83182.40

c.

interest=83182.40-(2650*12*2)=19582.40