Question
Please help me answer the questions below 1.Assume that you are calculating the future value (FV) of a single sum earning interest at 8% per
Please help me answer the questions below
1.Assume that you are calculating the future value (FV) of a single sum earning interest at 8% per year, compounded semiannually, for 8 years. If the compounding were changed to quarterly, then
A. the number of periods would increase from 8 to 16.
B. the number of periods would increase from 16 to 32.
C. the rate per period would decrease from 4% to 2%.
D. both A and C.
E. both B and C.
2.Assume that you will receive $2500 at the end of 6 years and want to know the present value (PV) of that sum. Which of the following is a reasonable number for the present value of the $2500? Even without knowing the required rate of return, it is possible to answer this question.
A. $2700.00
B. $2572.50
C. $2632.45
D. $2315.67
E. None of the above.
3.You have $2,500 in a savings account. The money is earning 4.8% per year, compounded quarterly. How many years will it take for your money to triple?
A. approximately 23
B. approximately 47
C. approximately 92
D. approximately 184
E. none of the above
4.Refer to question #3 above. If the compounding were changed from quarterly to semiannually,
then the time needed for your money to triple would:
A. increase because it is compounding more often.
B. decrease because it is compounding more often.
C. increase because it is compounding less often.
D. decrease because it is compounding less often.
E. do none of the above.
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