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Question: Client has made a deposit in a bank for a period of 4 years with a quarterly capitalization. The interest rate is updated each

Question: Client has made a deposit in a bank for a period of 4 years with a quarterly capitalization. The interest rate is updated each 2 years and stays fixed for the remaining 2 years. After 4 years client has withdrawn the full amount of 100,000 PLN. What was the amount paid onto the deposit at the beginning of investment. Please assume that the rate at the beginning of investment was 12% pa. under quarterly capitalization. Please assume that at the beginning of 2nd half of a deposit period, the rate was calculated from the available market quotations. However, the only rate quoted at that time was an equivalent rate for a 2 year period at 16% pa. under semi-annual capitalization.

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