Part 2

You just received a bonus of $ 1000.

a.Calculate the future value of $1000,given that it will be held in the bank for 10years and earn an annual interest rate of 7percent.

b.Recalculate part (a)using a compounding period that is (1) semiannual and (2) bimonthly.

c.Recalculate parts (a)and (b) using an annual interest rate of 14 percent.

d.Recalculate part (a) using a time horizon of 20 years at an annual interest rate of 7 percent.

e.What conclusions can you draw when you compare the answers in parts(c) and (d) with the answers in parts (a) and (b)?

(Related to Checkpoint 5.3) (Compound interest with non-annual periods) Calculate the amount of money that will be in each of the following accounts at the end of the given deposit period: Amount Annual Compounding Compounding Account Holder Deposited Interest Rate Periods Per Year (M) Periods (Years) Theodore Logan 111 $ 1,100 18 % 2 6 Vernell Coles 96,000 10 1 2 Tina Elliot 8,000 12 6 4 Wayne Robinson 118,000 8 4 4 Eunice Chung 30,000 12 12 6 Kelly Cravens 14,000 10 3 3