On January 1st you invest P dollars into two different bank accounts. The first account compounds interest at a term rate of r at the end of odd-numbered months. The second account compounds at a term rate of s at the end of even-numbered months. What is the combined value of these accounts after one year has passed?
On January 1st you invest P dollars into two different bank accounts. The first account compounds interest at a term rate of r at the end of odd-numbered months. The second account compounds at a term rate of s at the end of even-numbered months. What is the combined value of these accounts after one year has passed?
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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Transcribed Image Text:Example 1
On January 1st you invest I' dollars into two different bank accounts. The first account
compounds interest at a term rate of r at the end of odd-numbered months. The second
account compounds at a term rate of s at the end of even-numbered months. What is
the combined value of these accounts after one year has passed?
4²
Transcribed Image Text:Example 2
Your financial planner at the bank offers you a new investment product that earns
interest using the following scheme:
Any amount deposited does not earn interest for the first month it is in the
account.
. Afterwards, it earns interest at a rate of 0.5% at the end of every odd month
(January, March, May, July, September, November), and 1% at the end of every
even month (February, April, June, August, October, December).
(Note: these rates are not APRs.)
You'd like to make three equal deposits of into the account on October 1, 2022,
February 1, 2023, and April 1, 2023.
Determine I so that you have exactly $2000 on July 1, 2023.
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