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a person invests $600 for a period of 8 years
interest is compounded at the rate of 5% per annum for the first 3 years, and 6% per annum for the remaining 5 years.
how much will they have at the end of 8 years (to the nearest $)hi can you please explain me how to solve this. it is from the practice questions of chapter 22.
I am puzzled why you are asking this because the approach is explained in the free lectures and the workings are shown when you review your answers to the questions!
For each of the first 3 years you multiply by 1.05 to add on 5% interest each year, and you then multiply by 1.06 for each of the remaining 5 years so as to add on 6% each year.
So the end result is 600 x 1.05^3 x 1.06^5
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