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c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in
c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? -Select- The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a). The annuity in part (a) is compounded less frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest. The annuity in part (b) is compounded more frequently, therefore, more interest is earned on previously-earned interest. 25. Problem 5.25 (Future Value of an Annuity) eBook Problem Walk-Through Find the future values of the following ordinary annuities: a. FV of $300 paid each 6 months for 5 years at a nominal rate of 11% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent. $ b. FV of $150 paid each 3 months for 5 years at a nominal rate of 11% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur? -Select
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