Finance · Guided Practice

Present Value with Variable Rates

4 questions with answers. Try each one before revealing the answer.

1
A savings bond paid an effective rate of interest of 2%\displaystyle 2\% in the first year, 3%\displaystyle 3\% in the second year and 2.5%\displaystyle 2.5\% in the third year.
After 3\displaystyle 3 years the balance was £8000\displaystyle \pounds 8000.
Calculate the amount originally deposited.
Give your answer to the nearest penny.
Video solution coming soon
2
An account paid an effective rate of interest of 1.5%\displaystyle 1.5\% per year for 2\displaystyle 2 years and then 2.2%\displaystyle 2.2\% per year for 2\displaystyle 2 years.
After 4\displaystyle 4 years the balance was £5400\displaystyle \pounds 5400.
Calculate the amount originally deposited.
Give your answer to the nearest penny.
Video solution coming soon
3
An account paid an effective rate of interest of 0.5%\displaystyle 0.5\% per month for 6\displaystyle 6 months and then 0.3%\displaystyle 0.3\% per month for 6\displaystyle 6 months.
After 12\displaystyle 12 months the balance was £3200\displaystyle \pounds 3200.
Calculate the amount originally deposited.
Give your answer to the nearest penny.
Video solution coming soon
4
A corporate account paid an effective rate of interest of 4%\displaystyle 4\% in the first year and 1.8%\displaystyle 1.8\% in the second year.
After 2\displaystyle 2 years the balance was £4500\displaystyle \pounds 4500.
Calculate the amount originally deposited.
Give your answer to the nearest penny.
Video solution coming soon