To what sum will $3000 amount to in 10 years if invested at a 6% effective annual rate for the first 5 years and than at a rate of 6% compounded semiannually thereafter?

Answer 1

Formula: total = base ( 1 + rate) ^n where n=number of compounding periods

n1= 5 because compound annually

Total (after 5 years) = 3000*(1+0.06)^5 = $4014.68

n2=5*2 = 10 because compounded biannually

Total (after 10) = 4014.68 (1 + 0.06)^10 = $7189.68