part 1 --. For semiannual compounding, this means you would multiply the number of years by two to get the total number of periods. Consider a deposit into a bank with a stated interest rate 4%, compounded quarterly, for 5 years.

The periodic interest rate is % and the number of periods would be

part 2 -

part 3-

Consider a dollar amount of $1,000 today, along with a nominal interest rate of 15.00%. You are interested in calculating the future value of this amount after 7 years. For all future value calculations, enter $1,000 (with the negative sign) for PV and 0 for PMT. When calculating the future value of $1,000, compounded annually for 7 years, you would enter a value of for N, a value of for I/Y. Using the keystrokes you just identified on your financial calculator, the future value of $1,000, compounded annually for 7 at the given nominal interest rate, yields a future value of approximately When calculating the future value of $1,000, compounded semi-annually (twice per year) for 7 years, you would enter a value of for N, a value of for I/Y. Using the keystrokes you just identified on your financial calculator, the future value of $1,000, compounded semi-annually for 7 at the given nominal interest rate, yields a future value of When calculating the future value of $1,000, compounded quarterly for 7 years, you would enter a value of for N, a value of for I/Y. Using the keystrokes you just identified on your financial calculator, the future value of $1,000, compounded quarterly for 7 at the given nominal interest rate, yields a future value of When calculating the future value of $1,000, compounded monthly for 7 years, you would enter a value of for N, a value of for I/Y. When calculating the future value of $1,000, compounded monthly for 7 years, you would enter a value of for N, a value of for I/Y. Using the keystrokes you just identified on your financial calculator, the future value of $1,000, compounded monthly for 7 at the given nominal interest rate, yields a future value of Hint: Assume that there are 365 days in a year. When calculating the future value of $1,000, compounded daily for 7 years, you would enter a value of for N, a value of for I/Y. Using the keystrokes you just identified on your financial calculator, the future value of $1,000, compounded daily for 7 at the given nominal interest rate, yields a future value of Based on the results of your calculations, you can conclude that (all else equal) more frequent compounding leads to a future value. This is due to a periodic interest for more frequent compounding. Now it's time for you to practice what you've learned. Consider a dollar amount of $1,000 today, along with a nominal interest rate of 12.00%. You are interested in calculating the future value of this amount after 8 years. For all future value calculations, enter $1,000 (with the negative sign) for PV and 0 for PMT. The future value of $1,000, compounded annually for 8 at the given nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded semi-annually for 8 at the given nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded quarterly for 8 at the given nominal interest rate, is approximately Using your financial calculator, the future value of $1,000, compounded monthly for 8 at the given nominal interest rate, is approximately Hint: Assume that there are 365 days in a year. Using your financial calculator, the future value of $1,000, compounded daily for 8 at the given nominal interest rate, is approximately