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 Consumer Mathematics - Compound Interest (Posted on 2006-10-04)
A boy invests a sum of \$4000 on his 10th birthday in the year 1996, with an annual interest rate of 7%, compounded every six months. During some stage of the investment, the interest rate changes to an annual rate of 6%, still compounded every six months. On the boy's 18th birthday, the boy checks his account to see a sum of \$6770. At what point in time did the interest rate change from 7% to 6%?

 No Solution Yet Submitted by Chris, PhD Rating: 3.7500 (4 votes)

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 re: analytic solution | Comment 4 of 5 |
(In reply to analytic solution by Charlie)

I agree with your result.  When the calculations are rounded, the answer is that the interest declined to 6% 5.5 years after the boy's 10th birthday.
 Posted by george kirklin on 2006-10-05 13:25:58

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