To calculate the total amount in the account at the end of the period considered, we need to figure two parts: the amount from Hiwot's deposits for the first five years and the amount from her monthly deposits for the next five years. For the first five years, Hiwot is depositing Br. 1,000 every three months at an interest rate of 10% compounded quarterly. After five years, she changed her deposits to Br. 500 monthly at an interest rate of 12% compounded monthly.
To calculate the total amount in the account at the end of the period considered, we need to figure two parts: the amount from Hiwot's deposits for the first five years and the amount from her monthly deposits for the next five years.
Hiwot is depositing Br. 1,000 at the end of every three months, which means she is making 5 x 4 = 20 deposits. The interest is compounded quarterly at a rate of 10%. We can use the formula for compound interest:
Amount = Principal x (1 + (Rate / Frequency)) ^ (Frequency x Time)
For Hiwot's deposits, the principal is Br. 1,000, the rate is 0.10, the frequency is 4 (quarterly), and the time is five years. Plugging in these values, we can calculate the amount from her deposits for the first five years.
After five years, Hiwot changes her deposits to Br. 500 monthly. The interest is now compounded monthly at a rate of 12%. We can again use the compound interest formula:
Amount = Principal x (1 + (Rate / Frequency)) ^ (Frequency x Time)
For Hiwot's monthly deposits, the principal is the final amount from Part 1 (the amount at the end of the first five years), the rate is 0.12, the frequency is 12 (monthly), and the time is five years. Plugging in these values, we can calculate the amount from her monthly deposits for the next five years.
To find the total amount in the account at the end of the period considered, we add the amount from Part 1 to the amount from Part 2.
