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Problem Walk$-$Through

Find the amount to which $$400$ will grow under each of these conditions:

a$.10\%$ compounded annually for $5$ years. Do not round intermediate calculations. Round your answer to the nearest cent.

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b$.10\%$ compounded semiannually for $5$ years. Do not round intermediate calculations. Round your answer to the nearest cent.

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c$.10\%$ compounded quarterly for $5$ years. Do not round intermediate calculations. Round your answer to the nearest cent.

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d$.10\%$ compounded monthly for $5$ years. Do not round intermediate calculations. Round your answer to the nearest cent.

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e$.10\%$ compounded daily for $5$ years. Assume $365-$days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.

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f$.$ Why does the observed pattern of FVs occur?

The future values increase because as compounding periods per year increase, interest is earned on interest more frequently. $$

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Partially Correct