Investment 2

Jack invested $5000 in a 5-month term deposit at 4.7% p. A. . At the end of the 5-months, jack reinvested the maturity value from the first deposit into an 11-month term deposit at 7.3% p. A. What is the maturity value at the end of the second term deposit?

Correct result:

c =  5436.644 USD

Solution:

a=5000 q1=1+4.7100121.0038 q2=1+7.3100121.0059  b=a q15=5000 1.003855096.6067 USD c=b q211=5096.6067 1.005911=5436.644 USDa=5000 \ \\ q_{1}=\sqrt[12]{ 1+\dfrac{ 4.7 }{ 100 } } \doteq 1.0038 \ \\ q_{2}=\sqrt[12]{ 1+\dfrac{ 7.3 }{ 100 } } \doteq 1.0059 \ \\ \ \\ b=a \cdot \ q_{1}^{ 5 }=5000 \cdot \ 1.0038^{ 5 } \doteq 5096.6067 \ \text{USD} \ \\ c=b \cdot \ q_{2}^{ 11 }=5096.6067 \cdot \ 1.0059^{ 11 }=5436.644 \ \text{USD}



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