Question

$2,000 is deposited today into a bank account. The account earns 4.3% per annum compounded quarterly for the first 4 years, then 6.3% per annum compounded monthly thereafter. Assuming no further deposits or withdrawals are made,

(a) Calculate the account balance six months from today.

(b) Calculate the account balance 4 years from today.

(c) Calculate the account balance 4.25 years from today.

(d) Calculate the account balance 13 years from today.

Answer 1

(a)	Account balance six months from today		$ 2,043.23
Working:
	A	=	P*(1+i)^n		Where,
		=	2000*(1+0.01075)^2		P			=	$ 2,000.00
		=	$ 2,043.23		i	=	4.3%/4	=	0.01075
					n			=	2
(b)	Account balance 4 years from today		$ 2,373.18
Working:
	A	=	P*(1+i)^n		Where,
		=	2000*(1+0.01075)^16		P			=	$ 2,000.00
		=	$ 2,373.18		i	=	4.3%/4	=	0.01075
					n			=	16
(c)	Account balance 4.25 years from today		$ 2,410.75
Working:
	A	=	P*(1+i)^n		Where,
		=	2373.18*(1+0.00525)^3		P			=	$ 2,373.18
		=	$ 2,410.75		i	=	6.3%/12	=	0.00525
					n			=	3
(d)	Account balance 13 years from today		$ 4,243.78
Working:
	A	=	P*(1+i)^n		Where,
		=	2410.75*(1+0.00525)^108		P			=	$ 2,410.75
		=	$ 4,243.78		i	=	6.3%/12	=	0.00525
					n			=	108