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    seabird01's Avatar
    seabird01 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Mar 17, 2012, 09:33 AM
    Compound Interest
    Please help. Struggling with these two compound interest questions.

    1. How much would you need to invest today to have $4,500 in 6 years and 4
    Months, if interest is 3% compounded quarterly?


    2. John invested $5000 at 1.25% compounded semiannually. After 30 months,
    The interest rate increased by 0.75%. How much will the investment be
    Worth after 5 years?
    eeseely's Avatar
    eeseely Posts: 100, Reputation: 3
    Junior Member
    		  
    #2

    Mar 21, 2012, 08:02 AM
    Using a spreadsheet, divide $4,500 by (1.03)^25.333

    25 comes from (6 yrs times 4) plus 1quarter +1/3 quarter = 25.333

    The answer I got was $2,128.36
    eeseely's Avatar
    eeseely Posts: 100, Reputation: 3
    Junior Member
    		  
    #3

    Mar 21, 2012, 08:22 AM
    Here we have (1.0123)^5 times $5000 = $5,320.41

    Then we have (1.02)^5 times $5320.41 = $5,874.16
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