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For questions 1 - 4 use a required nominal annual return: I jus finished this homework, and i wanted to know wheter my answers were
For questions 1 - 4 use a required nominal annual return: I jus finished this homework, and i wanted to know wheter my answers were correct or no? | 5.00% | ||
1. Consider a 1-year CD. | Principal value | $5,000.00 | |
What is the future value of the CD in 1 year AND what is the effective annual rate? | |||
Future Value | EFF | ||
a. annual compounding? | $5,250.00 | 5.00% | |
b. semi-annual compounding? | $5,253.13 | 5.06% | |
c. quarterly compounding? | $5,254.73 | 5.09% | |
d. monthly compounding? | $5,255.81 | 5.12% | |
e. daily compounding? | $5,256.34 | 5.13% | |
2. Rework problem #1 assuming a 5-year CD with $5000 principal. | |||
Future Value | EFF | ||
a. annual compounding? | $6,381.41 | 5.10% | |
b. semi-annual compounding? | $6,400.42 | 5.11% | |
c. quarterly compounding? | $6,410.19 | 5.12% | |
d. monthly compounding? | $6,416.79 | 5.12% | |
e. daily compounding? | $6,420.02 | 5.13% | |
3. Assume you want to invest $1000 at the END of every year for the next 5 years. | |||
Future Value | |||
a. What is the future value in year 5, if interest is compounded annually? | $5,536.79 | ||
b. What is the future value in year 5 if interest is compounded semiannually? | $12,645.03 | ||
4. Rework question 3, assuming payments are made at the BEGINNING of each period. | |||
Future Value | |||
a. What is the future value in year 5, if interest is compounded annually? | $5,819.22 | ||
b. What is the future value in year 5 if interest is compounded semiannually? | $13,291.70 |
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