Your financial advisor suggests that you invest $ 10,000 in a traditional

3-year investment certificate at an annual compound interest rate of 4.00%. When this first investment certificate expires, you will reinvest your funds in a second 2-year certificate, at the then prevailing interest rate.


What must be the minimum annual interest rate, compounded quarterly, so that, at the end of the second investment certificate, you obtain an amount identical to that which you would obtain at the end of the graduated rate investment certificate calculated in the previous year ($ 12,460)?
 
PS. : The amount of $ 12,460 includes the initial investment of $10,000 + the interest of $2,460)


Can I have the details of the calculations please?

Answer rating: 100% (QA)

I PX RXT 100 where P principal 10... View the full answer