Mr. Rafał has opened a four-year compound interest deposit, paying the bank 5000 PLN. The annual interest rate on the deposit is equal to 6%. Calculate the amount that from the deposit after the period of saving, if the capitalization of interest is (a) annual (b) semi-annual (c) quarterly. Ignore the capital gains tax .
Mr. Rafał has opened a four-year compound interest deposit, paying the bank 5000 PLN. The annual interest rate on the deposit is equal to 6%. Calculate the amount that from the deposit after the period of saving, if the capitalization of interest is (a) annual (b) semi-annual (c) quarterly. Ignore the capital gains tax .
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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2.164. Mr. Rafał has opened a four-year
(a) annual (b) semi-annual (c) quarterly.
Ignore the
Expert Solution
Step 1
The above problem can be solved by using the compound interest formula which is given as follows:-
where, A = Total amount including interest plus principal
P = Principal
r = rate of interest applicable
n = no. of times interest is compounded per time period
t = total time duration of investment
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