Although anniwal compounding-interest compounded once per year-is very commen and an instructive way to introdsce fucure value calculations, other compounding periods are possible. For example, semiannual compounding involves interest compounded twice par year: In such a scenario, vou must consider the periodic interest rates and the number of compounding periods. For anriut compounding, it a uniele the periodic internst rate is the same as the stated nominal ieterest rate and the number of compounding periods is simply equal to the number of years. However, under semiannuat compounding, the periodic interest rate is calculated as: For semiannuat compounding, this means you wiuld divide the stated annual rate ty two. The number of periods is caiculateri as: Mamber of periads =( Number of years) (Periads per year) For semiannual compounding, this means you would multiply the number of years by two to get the total number of periods. Consider a deposit inso a bank with a stated interest rate 6%, compounded monthly, for 4 years. The periadic interest rate is amgunt after 7 years. For al focure value caleurations, enfer 11,000 (with the negotive s(gi)) for fy and a far fift: Therest tate, yelds a hubure value et eptrosimately value of for 1/N nominal interest rate, yields a futwer vahie of Wiven calculating the tisture value of $1,050, cempounded cicarteffy for 7 years, you wiult evter a value of far lex. interest rate, yeles a tature value of When calculating the future value of 11.000, compounded martivy for 7 yearl, rou would encer a velue of Nor N2 a viswe of tor the Weing the keystrokes you fust lidepkined on your frasncial calculater, the future walue of $1,000, compecnoed manthir for 7 at the given nomiral interest rate, yields a fubure walue of Mint: Mstume that there are 365 days in a vear. When calculating the future value of 11,000, compoundes dally for 7 years, you would enter a vatue of for No a valuen of fer tir. interest rate, rields a huture value of Based on the resuits of your calcutations, you can conciube that (all eise equa) more treayenk crivposiding least fo a Miture vilue. This is due to a periodic interest for meth frequent compountmy. Now it's time for you to prattice what vou ve leamed. Consider a dellar amount of 11,000 today, along with a nominal interest rate of 15 .ogy. You are intertited in caioulating the future walie of the amount after it years. For all future walve catculations, enter 11,000 (with the negative sope) for fr and 0 for PuT, The future value of 51,000 , compounded anpally fer 4 at the given nominal interest.rate, is approsimately For all future value calculations, enter $1,000 (with the negative sign) for PV and 0 for PMI The future value of $1,000, compounded annually for 4 at the giveo nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded semi-ancuaby for 4 at the civen nominal interest rate, is approsimately Using your financial calcilates, the future value of $1,000, compounded quarteit for 4 at the given nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded monthily for 4 at the given nominal interes rate, is ascegaimately Hint: Assume that there are 365 days in a year. Using your financial calculatos, the future value of $1,000, compounded daily for 4 at the given nominal interest rate, is asproviniately Although anniwal compounding-interest compounded once per year-is very commen and an instructive way to introdsce fucure value calculations, other compounding periods are possible. For example, semiannual compounding involves interest compounded twice par year: In such a scenario, vou must consider the periodic interest rates and the number of compounding periods. For anriut compounding, it a uniele the periodic internst rate is the same as the stated nominal ieterest rate and the number of compounding periods is simply equal to the number of years. However, under semiannuat compounding, the periodic interest rate is calculated as: For semiannuat compounding, this means you wiuld divide the stated annual rate ty two. The number of periods is caiculateri as: Mamber of periads =( Number of years) (Periads per year) For semiannual compounding, this means you would multiply the number of years by two to get the total number of periods. Consider a deposit inso a bank with a stated interest rate 6%, compounded monthly, for 4 years. The periadic interest rate is amgunt after 7 years. For al focure value caleurations, enfer 11,000 (with the negotive s(gi)) for fy and a far fift: Therest tate, yelds a hubure value et eptrosimately value of for 1/N nominal interest rate, yields a futwer vahie of Wiven calculating the tisture value of $1,050, cempounded cicarteffy for 7 years, you wiult evter a value of far lex. interest rate, yeles a tature value of When calculating the future value of 11.000, compounded martivy for 7 yearl, rou would encer a velue of Nor N2 a viswe of tor the Weing the keystrokes you fust lidepkined on your frasncial calculater, the future walue of $1,000, compecnoed manthir for 7 at the given nomiral interest rate, yields a fubure walue of Mint: Mstume that there are 365 days in a vear. When calculating the future value of 11,000, compoundes dally for 7 years, you would enter a vatue of for No a valuen of fer tir. interest rate, rields a huture value of Based on the resuits of your calcutations, you can conciube that (all eise equa) more treayenk crivposiding least fo a Miture vilue. This is due to a periodic interest for meth frequent compountmy. Now it's time for you to prattice what vou ve leamed. Consider a dellar amount of 11,000 today, along with a nominal interest rate of 15 .ogy. You are intertited in caioulating the future walie of the amount after it years. For all future walve catculations, enter 11,000 (with the negative sope) for fr and 0 for PuT, The future value of 51,000 , compounded anpally fer 4 at the given nominal interest.rate, is approsimately For all future value calculations, enter $1,000 (with the negative sign) for PV and 0 for PMI The future value of $1,000, compounded annually for 4 at the giveo nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded semi-ancuaby for 4 at the civen nominal interest rate, is approsimately Using your financial calcilates, the future value of $1,000, compounded quarteit for 4 at the given nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded monthily for 4 at the given nominal interes rate, is ascegaimately Hint: Assume that there are 365 days in a year. Using your financial calculatos, the future value of $1,000, compounded daily for 4 at the given nominal interest rate, is asproviniately