Find the future values of the ordinary annuities

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Future Value of an Annuity for Various Compounding Periods

Problem 1: Find the future values of the following ordinary annuities.

1.a. FV of $600 each 6 months for 7 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.

1.b. FV of $300 each 3 months for 7 years at a nominal rate of 12%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.

1.c. The annuities described in parts a and b have the same amount of money paid into them during the 7-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 7 years. Why does this occur?

Reference no: EM132993192

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