Question
Changing compounding frequency Usingannual, semiannual, and quarterly compoundingperiods, (1) calculate the future value if$5,000 is deposited initially at 12% annual interest for 5 years, and(2)
Changing compounding frequencyUsingannual, semiannual, and quarterly compoundingperiods, (1) calculate the future value if$5,000 is deposited initially at 12% annual interest for 5 years, and(2) determine the effective annual rate(EAR).
Annual Compounding
(1) The futurevalue, FVn, is $________. (Round to the nearestcent.)
(2) If the 12% annual nominal rate is compoundedannually, the EAR is _________%. (Round to two decimalplaces.)
Semiannual Compounding
(1) The futurevalue, FVn, is $___________. (Round to the nearestcent.)
(2) If the 12% annual nominal rate is compoundedsemiannually, the EAR is ________%. (Round to two decimalplaces.)
Quarterly Compounding
(1) The futurevalue, FVn, is $___________. (Round to the nearestcent.)
(2) If the 12% annual nominal rate is compoundedsemiannually, the EAR is ________%. (Round to two decimalplaces.)
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