Future value for compounding periods

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Reference no: EM131993981

Future value for various compounding periods

Find the amount to which $700 will grow under each of these conditions:

a. 16% compounded annually for 5 years. Round your answer to the nearest cent.

$ ______

b. 16% compounded semiannually for 5 years. Round your answer to the nearest cent.

$ ______

c. 16% compounded quarterly for 5 years. Round your answer to the nearest cent.

$ ______

d. 16% compounded monthly for 5 years. Round your answer to the nearest cent.

$ ______

e. 16% compounded daily for 5 years. Round your answer to the nearest cent.

$ ______

f. Why does the observed pattern of FVs occur?

i. The future values increase because as compounding periods per year increase, interest is earned on interest less frequently

ii. The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently

iii. The future values increase because as compounding periods per year increase, interest is earned on interest more frequently

iv. The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently

v. The future values decrease because as compounding periods per year decrease, interest is earned on interest more frequently

Reference no: EM131993981

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