You are working as a Priority Relationship manager in ABC bank. Your client, Ms. Rachel is a surplus unit who has decided to put her saving in ABC bank.

Ms. Rachel would like to have an amount of 1000 USD multiplying with 7, to give her son after 7 years

The interest rate is 9% p.a.

How much should Ms. Rachel deposit at the present to get the required amount if the interest is compounding:

(1) Annually?

(2) Quarterly?

(3) Monthly?

Does the frequency of compounding have impact on cash flow? Explain?