a. Calculate the future sum of $6,500, given that it will be held in a Swiss bank
Question:
a. Calculate the future sum of $6,500, given that it will be held in a Swiss bank for 5 years at an annual interest rate of 7 percent.
b. Recalculate part(a) assuming the interest rates is (1) an APR of 7 percent compounded semiannually and (2) an APR of 7 percent compounded bimonthly.
c. Recalculate parts(a) and(b) for an APR of 11 percent.
d. Recalculate part(a) using a time horizon of 12 years (the APR is still 7 percent).
e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts(c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?
Step by Step Answer:
Foundations Of Finance
ISBN: 9781292318738
10th Global Edition
Authors: Arthur Keown, John Martin, J. Petty