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QUESTION 3 [Total 4 marks] Suppose $10,000 is invested for 1 year at an interest rate of 6% per annum compounded. (a) Calculate the future

QUESTION 3 [Total 4 marks]

Suppose $10,000 is invested for 1 year at an interest rate of 6% per annum compounded.

(a) Calculate the future value (FV) if the compounding is performed quarterly. What is the effective annual rate of interest? (2 marks)

(b) Calculate the future value (FV) if the compounding is performed monthly. What is the effective annual rate of interest? (2 marks)

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