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To solve this problem, we can break it down into two parts: Calculate the future value of the initial investment at 9 % p .
To solve this problem, we can break it down into two parts:
Calculate the future value of the initial investment at pa compound interest for years.
Calculate the future value of the remaining balance at pa interest, compounded semiannually for years.
Part : Future Value of Initial Investment
We can use the formula for the future value of an ordinary annuity to calculate the future value of the annual investments at pa compound interest for years.
The formula for the future value of an ordinary annuity is:
FV P rn r
Where:
FV Future Value
P Annual payment
r Interest rate per period
n Number of periods
Using the given values:
P R
r pa
n years
We can calculate the future value of the initial investment.
Part : Future Value of Remaining Balance
For the remaining balance, we can use the compound interest formula:
A P rnnt
Where:
A the amount of money accumulated after n years, including interest.
P the principal amount initial amount of money
r annual interest rate in decimal
n number of times that interest is compounded per year.
t time the money is invested for in years.
Using the given values:
P R
r pa
n compounded semiannually
t years
We can calculate the future value of the remaining balance.
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