Michael deposits $20,000 into his bank account. For the first 4 years the bank credits an interest of i convertible quarterly and 3i convertible monthly after that.

If he has $80,000 in his account after 14 years, how much does he have after 3 years?

• $26,918.25
• $22,084.93
• $22,873.49
• $22,604.63
• $22,603.53

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.

Solution: E

Deposit: 20,000

i for 4 years quarterly

3i after the 4 years monthly

80,000 after 14 years

First find i:

80,000 = 20,000(1 + i/4)16(1 + 3i/12)108 4 = (1 + i/4)136 i = .045

After 3 years:

20,000(1 + i/4)12 = $22,603.53

Hardiek, Aaron (June 2010). "Study Questions for Actuarial Exam 2/FM". digitalcommons.calpoly.edu. Retrieved November 20, 2023.