Consider a dollar amount of $$500$ today, along with a nominal interest rate of $9\mathrm{.}00\%.$ You are

interested in calculating the future value of this amount after $5$ years.

For all future value calculations, enter $-$$$500($with the negative sign$)$ for PV and $0$ for PMT$.$

When calculating the future value of $$500,$ compounded annually for $5$ years, you would enter

a value of $5_{{?}^{?}}(grad)$ for $N,$ a value of $9_{?}^{***}$ for $\frac{\text{I}}{Y}.$

Using the keystrokes you just identified on your financial calculator, the future value of $$500,$

compounded annually for $5$ at the given nominal interest rate, yields a future value of

approximately

When calculating the future value of $$500,$ compounded semi$-$annually $($twice per year$)$ for $5$

years, you would enter a value of

for $N,$ a value of

for I$/$Y$.$

Using the keystrokes you just identified on your financial calculator, the future value of $$500,$

compounded semi$-$annually for $5$ at the given nominal interest rate, yields a future value of

When calculating the future value of $$500,$ compounded quarterly for $5$ years, you would enter

a value of

for $N,$ a value of

for I$/$Y$.$

Using the keystrokes you just identified on your financial calculator, the future value of $$500,$

compounded quarterly for $5$ at the given nominal interest rate, yields a future value of

When calculating the future value of $$500,$ compounded monthly for $5$ years, you would enter

a value of

for $N,$ a value of

for $\frac{\text{I}}{Y}.$

Using the keystrokes you just identified on your financial calculator, the future value of $$500,$

compounded monthly for $5$ at the given nominal interest rate, yields a future value of

Hint: Assume that there are $365$ days in a year.

When calculating the future value of $$500,$ compounded daily for $5$ years, you would enter a

value of

for $N,$ a value of

for $\frac{\text{I}}{Y}.$

Using the keystrokes you just identified on your financial calculator, the future value of $$500,$

compounded daily for $5$ at the given nominal interest rate, yields a future value of

Based on the results of your calculations, you can conclude that $($all else equal$)$ more frequent

compounding leads to a

future value. This is due to a

periodic interest for

more frequent compounding.