Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the bank's evaluation process, you have been asked to take an examination which covers several financial analysis techniques. The first section of the test addresses discounted cash flow analysis.

Note: When solving these questions, the use of financial calculator is not allowed; you have to show the full steps involved.

1.What is the future value of an initial $200 after 5 years if it is invested in an account paying 12 percent annual interest?

2.What is the future value of $200 after 4 years under 10 percent annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding?

3.What is the effective annual rate (EAR)? What is the EAR for a nominal rate of 10 percent, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?