Jeff wins 600000 after taxes in the lottery and decides to i

Jeff wins $600,000 (after taxes) in the lottery and decides to invest half of it in a 10-year CD that pays 7.25% interest compounded monthly. He invests the other half in a money market fund that unfortunately turns out to average only 3.2% interest compounded annually over the 10-year period. How much money will he have altogether in the two accounts at the end of the 10-year period?

Solution

Amount in CD = 300,000(1+ 0.0725/12)^(12*10)=$ 618,069.65

Amount in Market fund= 300,000(1+0.032)^10 =$ 411,072.31

Hence total money is

$ 618,069.65+ $ 411,072.31 =$ 1,029,141.96