Question
Future Value for Various Compounding Periods Find the amount to which $700 will grow under each of the following conditions. Do not round intermediate calculations.
Future Value for Various Compounding Periods
Find the amount to which $700 will grow under each of the following conditions. Do not round intermediate calculations. Round your answers to the nearest cent.
9% compounded annually for 5 years.
$
9% compounded semiannually for 5 years.
$
9% compounded quarterly for 5 years.
$
9% compounded monthly for 5 years.
$
Future Value of an Annuity for Various Compounding Periods
Find the future values of the following ordinary annuities.
FV of $600 each 6 months for 9 years at a nominal rate of 16%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.
$
FV of $300 each 3 months for 9 years at a nominal rate of 16%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.
$
The annuities described in parts a and b have the same amount of money paid into them during the 9-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 9 years. Why does this occur?
-Select-The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a).The annuity in part (a) is compounded less frequently; therefore, more interest is earned on interest.The annuity in part (a) is compounded more frequently; therefore, more interest is earned on interest.The annuity in part (b) is compounded less frequently; therefore, more interest is earned on interest.The annuity in part (b) is compounded more frequently; therefore, more interest is earned on interest.Item 3
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