Question
FV of $700 paid each 6 months for 5 years at a nominal rate of 4% compounded semiannually. Do not round intermediate calculations. Round your
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FV of $700 paid each 6 months for 5 years at a nominal rate of 4% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.
$
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FV of $350 paid each 3 months for 5 years at a nominal rate of 4% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.
$
-
These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. 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 previously-earned interest.The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest.The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest.The annuity in part (b) is compounded more frequently; therefore, more interest is earned on previously-earned interest.Item 3
FV of $700 paid each 6 months for 5 years at a nominal rate of 4% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.
$
FV of $350 paid each 3 months for 5 years at a nominal rate of 4% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.
$
These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. 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 previously-earned interest.The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest.The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest.The annuity in part (b) is compounded more frequently; therefore, more interest is earned on previously-earned interest.Item 3
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Fundamentals of Investments, Valuation and Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
8th edition
1259720697, 1259720691, 1260109437, 9781260109436, 978-1259720697
