(Related to Checkpoint 5.3) (Compound interest with non-annual periods) Your grandmother just gave you $10,000. a....
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(Related to Checkpoint 5.3) (Compound interest with non-annual periods) Your grandmother just gave you $10,000. a. Calculate the future value of $10,000, given that it will be invested for 10 years at an annual interest rate of 8 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly. c. Now let's look at what might happen if you can invest the money at a rate of 16 percent rather than 8 percent rate; recalculate parts (a) and (b) for an annual interest rate of 16 percent. d. Now let's see what might happen if you invest the money for 20 years rather than 10 years; recalculate part (a) using a time horizon of 20 years (annual interest rate is still 8 percent). e. With respect to the changes in the stated interest rate and length of time the money is invested in parts (c) and (d), what conclusions can you draw? (Related to Checkpoint 5.3) (Compound interest with non-annual periods) Your grandmother just gave you $10,000. a. Calculate the future value of $10,000, given that it will be invested for 10 years at an annual interest rate of 8 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly. c. Now let's look at what might happen if you can invest the money at a rate of 16 percent rather than 8 percent rate; recalculate parts (a) and (b) for an annual interest rate of 16 percent. d. Now let's see what might happen if you invest the money for 20 years rather than 10 years; recalculate part (a) using a time horizon of 20 years (annual interest rate is still 8 percent). e. With respect to the changes in the stated interest rate and length of time the money is invested in parts (c) and (d), what conclusions can you draw?
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