Compoundingfrequency, timevalue, and effective annual ratesFor each of the cases in the followingtable,

Case Amount of r m(times/year) Deposit period

initial deposit (years)

A $2,500 6% 2 5

B $50,000 12% 6 3

C $1,000 5% 1 10

D $20,000 16% 4 6

a.Calculate the future value at the end of the specified deposit period.

b.Determine the effective annualrate, EAR.

c.Compare the nominal annual rate,r, to the effective annualrate, EAR. What relationship exists between compounding frequency and the nominal and effective annualrates?