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June 2nd, 2016, 11:40 AM  #1 
Senior Member Joined: May 2008 Posts: 161 Thanks: 31  Tricky compound interest problem Beer soaked ramblings follow. Got stumped by the following problem for about a day. I be sure my friends Sir Denis and Sir Jeff will appreciate it even more than I did. Hated it. Not that it's a bad problem but simply because I couldn't solve it sober. No solution needed. Just for enjoyment. On March 1, 1993, Mr. H deposited \$4,200 into an account that used a 4% annual effective interest rate when the balance was under \$5,000 and a 5.5% annual effective interest rate when the balance is at least $5,000. Mr. H withdrew \$1,000 on March 1, 1999. If there were no other deposits or withdrawals, find Mr. H’s account balance on March 1, 2003. Ans. \$5,257.17 P.S. How come the backslashes are getting displayed? 
June 2nd, 2016, 05:32 PM  #2 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 7,893 Thanks: 536 
2 questions: 1: is the interest credited once per year, on Mar 1st? 2: is the "5000 rule" in effect after credit of interest, or is the account "looked at" daily to calculate if the account balance plus accrued interest is at least 5000? 
June 2nd, 2016, 06:07 PM  #3 
Senior Member Joined: May 2016 From: USA Posts: 430 Thanks: 173  
June 3rd, 2016, 10:53 AM  #4  
Senior Member Joined: May 2008 Posts: 161 Thanks: 31  Beer soaked ramblings follow. Quote:
Yes.  
June 3rd, 2016, 12:54 PM  #5  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 7,893 Thanks: 536  Quote:
4200(1.04)^5 = 5109.94 : Mar1/1998 5109.94(1.055)  1000 = 4390.98 : Mar1/1999 4398.98(1.04)^4 = 5136.84 : Mar1/2003 So the bonus 5.5 rate paid only for year period Mar1/98 to Mar199 Given answer 5257.17 hereby branded wrong  

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