Please show how this problem is solved thanks Rick Field deposited $ 10,000 into

Question

Please show how this problem is solved thanks

Rick Field deposited $ 10,000 into an account at his credit union. The money was left on deposit for 10 years, with no withdrawals. During the first five years, Rick earned 15% annual interest (nominal), compounded monthly. The credit union then changed its interest policy so that for the second five years he earned 18% annual interest (nominal), compounded quarterly. How much money was in Rick's account at the end of five years? How much money was in Rick's account at the end of ten years? Calculate the overall ROR (rate of return) that Rick received for all ten years.

Explanation / Answer

We have P = 10,000

a. At end of 5 Yrs. AMount = P*(1+i/m)^(n*m)

= 10000*(1+15%/12)^(5*12)

= $21,071.81

b. At end of 10 Yrs.

At end of 5 Yrs, Balance was $21,071.81. Now this becomes principle for next 5 yrs

So At end of 10 Yrs, AMount = $21,071.81*(1+18%/4)^(5*4)

= $50,819.18

c. ROR over 10 Yrs = ($50,819.18-10,000)/10,000 = 408.19%

So Overall ROR = 408.19%/10 = 40.82%

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