Calculate the future sum, Recalculate part (a) assuming the

Calculate the future sum

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Reference no: EM131488084

Question: (Compound interest with nonannual periods)

a. Calculate the future sum of $5,000, given that it will be held in the bank for 5 years at an annual interest rate of 6 percent.

b. Recalculate part (a) assuming the interest rates is (1) an APR of 6 percent compounded semiannually and (2) an APR of 6 percent compounded bimonthly.

c. Recalculate parts (a) and (b) for an APR of 12 percent.

d. Recalculate part (a) using a time horizon of 12 years (the APR is still 6 percent).

e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts (c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?

Reference no: EM131488084

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