I need help (6) Sean deposits $826 in a savings account that earns interest at I

Question

I need help

(6) Sean deposits $826 in a savings account that earns interest at Increasing Rates Bank. For the first three years the money is on deposit, the annual effective interest rate is 3%. For the next two years the annual effective interest rate is 4%, and for the following five years the annual effective interest rate is 5%. What is Sean's balance at the end of ten years? (7) For a fourteen-year investment, what level annual effective rate of interest gives the same accumulation as an annual effective rate of interest of 5% for eight years followed by a monthly effective rate of interest .6% for six years?

Explanation / Answer

Hi,
As per chegg policy, please post multiple questions as separate ones.
1. Given initial amount is 826$.
for the first 3 years the interest is 3%, compounded annually, we use the formula
V = P(1+r/n)(nt)
substituting, P=826, n=3, t=3 and r= 0.03 we get, balance at the end of third year as 902.59$
Now, next 2 years interest rates is 4%, substututing the same in above formula with P= 902.59 and t=2, we get
balance at the end of 5 years is $976.24
Now, next 5 years interest rates is 5%, substututing the same in above formula with P= 976.24 and t=5, we get
balance at the end of 10 years is $1,245.96

Thumbs up if this was helpful, otherwise let me know in comments

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