You have won the lottery and have received $ 12,000. As a financial expert, you are analyzing different options to invest this money:

1. Calculate the future of 12.000 $, given that it will be invested for 10 years at annual interest rate of 8%.

Future Value = 12,000*1.08¹⁰ = 25,907.10

2. Recalculate part (a) using compounding period that is bimonthly.

Annual rate=8%/6

Number of periods= 10*6=60

Future Value = 26,565.68

3. Now, lets look at what might happen if you invest the money at a rate 12% rather than 8%; recalculate part (a) for a semiannual interest rate.

Future value if annual compounding = 12,000 * 1.1210 = 37,270.18

Future value if bi monthly compounding = 12000*(1 + 12%/6)60 = 39,372.37

4. With respect to the changes in the interest rate and length of time the money is invested in parts a and c, what conclusion can you draw?

Only need D