1. Interest per month is 9,96/12=0.83%. Monthly compounding for 4 years means 4 x 12 = 48 times compounded. So accumulated amount after 4 years =4300 x (100.83/100 to the power of 48) = 4300 x 1.487 = $6394.This is the accumulated value after 4 years. Now this is the principal amount compounded at 9 % semi annually for 2.5 years. 9 % annually means 4.5% semi annually compounded for 2.5 years. This means 2.5 x 2=5 times compounded. So Accumulated amount = 6394 x ( 104.5/100 to the power of 5) = 6394 x 1.2462 =$7968. This is the accumulated value after 2.5 years.

2. Interest at 7.6% means 7.6/4 quarterly=1.9% quarterly. Quarterly interest for 6 years means 4 x 6 = 24 times compounded. And the accumulated amount is $7800. Therefore present value is 7800 x (100/101.9 to the power of 24)= 7800 x 0.63653 = 4964.94. So present value is $ 4965.

1) An investment of $4300.00 earns interest at 9.96% p.a compounded monthly for four years. At that time the interest rate is changed to 9% compounded semi-annually. how much will the accumulated value be two and a half years after the change?

2) What is the present value of $7800.00 payable in six years if the current interest rate is 7.6% p.a compounded quarterly ?