Future value of an annuity for various compounding periods

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Future Value of an Annuity for Various Compounding Periods

Find the future values of the following ordinary annuities:

  1. FV of $400 paid each 6 months for 10 years at a nominal rate of 12%, compounded semiannually. Round your answer to the nearest cent.

FV of $200 paid each 3 months for 10 years at a nominal rate of 12%, compounded quarterly. Round your answer to the nearest cent.

The annuities described in parts a and b have the same amount of money paid into them during the 10-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 10 years. Why does this occur?

Reference no: EM132375690

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