5-9B. (Compound interest with nonannual periods)

a. Calculate the future sum of $6,000, given that it will be held in the bank five years at an annual interest rate of 6 percent.

b. Recalculate part

(a) using a compounding period that is (1) semiannual and

(2) bimonthly.

c. Recalculate parts

(a) and

(b) for a 12 percent alillual interest rate.

d. Recalculate part

(a) using a time horizon of 12 years (annual interest rate is stiJl6 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 fOW1d in parts

(a) and (b)?