Future Value of an Annuity for Various Compounding Periods Find the future values of the following ordinary annuities FV of $400 each 6 months for 5 years at a nominal rate of 8 , compounded semiannually Do not round intermediate calculations Round your answer to the nearest cent $ FV of $200 each 3 months for 5 years at a nominal rate of 8 , 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 5 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 5 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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Future Value of an Annuity for Various Compounding Periods

Find the future values of the following ordinary annuities.

FV of $400 each 6 months for 5 years at a nominal rate of 8%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.

$
FV of $200 each 3 months for 5 years at a nominal rate of 8%, 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 5-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 5 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