Question
Variable Relationships and Future Value Consider an investment that pays $1000 today that is deposited in an account the grows over the next 5 years.
Variable Relationships and Future Value
Consider an investment that pays $1000 today that is deposited in an account the grows over the next 5 years. Assume semi-annual compounding (m=2) with an annual interest rate of 12%. Calculate the future value.
Now increase the compounding periods per year using monthly compounding (m=12). Solve for the new future value.
Which of the following are true?
When the compounding periods per year increases, the future value is unchanged | ||
When the compounding periods per year increases, the future value decreases | ||
When the compounding periods per year increases, the present value increases | ||
When the compounding periods per year increases, the future value increases |
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