Aunt Mabel put $36,000.00 into the bank when you graduated from High School. She

Question

Aunt Mabel put $36,000.00 into the bank when you graduated from High School. She promises to give you one quarter of the balance at the end of your Freshman year, one third of the balance at the end of your Sophomore year, one half of the balance at the end of your Junior year, and the remaining balance at the end of your Senior year.

Let's assume you go to the college directly after graduation. The interest rate is 7.500% during your freshman year, 2.000% during your sophomore year, 1.500% during your junior year, and 2.000% during your senior year.

Aunt Mabel will give you $ _______________ after your freshman year,

$_________________ after your Sophomore year,

$__________________answer after your junior year,

and $__________________answer after you graduate.

Explanation / Answer

Amount put into bank = 36,000
Interest rate = 7.5%
So Amount at end of Freshmen year = 36,000*(1+7.5%) = 38700
A quarter is given at end of freshmen year = 38700*1/4 = 9675

Balance Amount = 38700 - 9675 = 29025
Interest rate = 2%
So Amount at end of Sophomore Year =  29025 * (1+2%) = 29605.5
One third given at end of sophomore year = 29605.5 * 1/3 =  9868.5

Balance Amount = 29605.5 - 9868.5 = 19737
Interest rate = 2%
So Amount at end of Junior Year = 19737* (1+1.5%) = 20033.055
one half given at end of sophomore year =20033.055 * 1/2 =  10016.53

Balance Amount = 20033.055/2 = 10016.53
Interest rate = 2%
So Amount at end of Senior Year = 10016.535* (1+2%) = 10216.86
Amount at end of Senior year = 10216.86

Please discuss in case of doubt

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