Compound interest with nonannual periods

Assignment Help Financial Management

Reference no: EM131307876

(Compound interest with nonannual periods?)

a. Calculate the future sum of ?$4,000 ?, given that it will be held in the bank 8 years at an annual interest rate of 4 percent.

b. Recalculate part? (a) using compounding periods that are? (1) semiannual and? (2) bimonthly? (every two? months).

c. Recalculate parts? (a) and? (b) for a 8 percent annual interest rate. d. Recalculate part? (a) using a time horizon of 16 years? (annual interest rate is still 4 ?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: EM131307876

Questions Cloud

Discuss issues in executive compensation : Discuss issues in Executive compensation (why are they paid more - what is the justification, what are some of the morale issues surrounding exec compensation among employees, what's really fair in terms of exec comp, how can exec comp packages be co..

Diversified portfolio that has an expected return : Ivan Knobel holds a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. He is in the process of buying 1,000 shares of Syngine Corp at $20 a share and adding it to his portfolio. Syngine has an expected return of 13.0%..

Dividends are anticipated to maintain growth rate : The next dividend payment by Wyatt, Inc., will be $2.65 per share. The dividends are anticipated to maintain a growth rate of 6.50 percent, forever. If the stock currently sells for $48.90 per share, what is the required return?

Known as rate of return and discount rate : Your finance professor Dr. Awesome makes you the following offer: She will give you $3,000 at the end of each year for the next SIX years if you agree to pay her back $2,500 at the end of each of the following ten years. Should you accept this offer ..

Compound interest with nonannual periods : (Compound interest with nonannual periods?) Calculate the future sum of ?$4,000 ?, given that it will be held in the bank 8 years at an annual interest rate of 4 percent. Recalculate part? (a) using compounding periods that are? (1) semiannual and? (..

What is accumulated sum of each of the streams of? payments : (Compound annuity?) What is the accumulated sum of each of the following streams of? payments?

Cost is expected to increase four percent annually : Bart? Simpson, age 10 ?, wants to be able to buy a really cool new car when he turns 18 . His really cool car costs ?$19,000 ?today, and its cost is expected to increase 4 percent annually. How much will? Bart's car? cost, and how much does Bart have..

Calculate the amount of money that will have accrued : ?(Compound value?) Stanford? Simmons, who recently sold his? Porsche, placed ?$8,200 in a savings account paying annual compound interest of 6 percent. Calculate the amount of money that will have accrued if he leaves the money in the bank for 2 ?, 6..

How much are you willing to pay for the field : You are considering buying an oil field If you buy the field, you can extract the oil in one year There are 100 barrels of oil that can be extracted from the field; the cost of doing so is $4,000. You expect the price of oil in one year to be $50/bar..

User Account

All Pages