Annual interest rate of 6 percent

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Problem: You just received a bonus of ?$5,000.

a. Calculate the future value of ?$5,000?, given that it will be held in the bank for 7 years and earn an annual interest rate of 6 percent.

b. Recalculate part ?(a?) using a compounding period that is? (1) semiannual and? (2) bimonthly.

c. Recalculate parts ?(a?) and ?(b?) using an annual interest rate of 12 percent.

d. Recalculate part ?(a?) using a time horizon of 14 years at an annual interest rate of 6 percent.

e. What conclusions can you draw when you compare the answers in parts ?(c?) and ?(d?) with the answers in parts ?(a?) and ?(b?)?

Reference no: EM132420711

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