Dr. Zaius invests $10,000 in a CD with an annual interest rate of 4% that compounds semi-annually (twice a year). After six months, he rolls over the CD into another CD with an annual interest rate of 5% that compounds annually. After six months in the second CD, how much does Dr. Zaius have, in dollars?

Guest Oct 18, 2020

#1**+1 **

period is six months

interest per period .04 / 2 = .02

for the first 6 months final amount = 10000(1+.02)^{1} = $ 10 200

Next six months

interest is compounded annually .05

period = 1/2

now starts with 10200

10200 (1+.05)^{1/2 }= $ 10451.89

ElectricPavlov Oct 18, 2020