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(a) A principal of $70,000 is invested at an annual interest rate of 6% for 4 years. Find the difference in the future value
(a) A principal of $70,000 is invested at an annual interest rate of 6% for 4 years. Find the difference in the future value if the interest is compounded quarterly compared to continuous compounding. Round your answer to 2 decimal places. Which mathematical approach among those learnt in the module would you choose and how would you apply it? Comment on your results. (4 marks) (b) A regular saving of $50,000 is made into a sinking fund at the start of each year for 10 years. Determine the future value of the fund at the end of the 10th year, if the interest rate is 10% compounded semi-annually. Round your answer to 2 decimal places. Which mathematical approach among those learnt in the module would you choose and how would you apply it? Comment on your results.
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a To find the future value of the principal with quarterly compounding we use the formula FV P1 rnnt ...Get Instant Access to Expert-Tailored Solutions
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