Relationship between compounding frequency and future value

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Reference no: EM131962299

Comparing compounding periods. Personal Finance Problem. René Levin wishes to determine the future value at the end of 3 years of a $13,100 deposit made today into an account paying a nominal annual rate of 13%.

a. Find the future value of René's deposit, assuming that interest is compounded (1) annually, (2) quarterly, (3) monthly, and (4) continously.

b. Compare your findings in part a, and use them to demonstrate the relationship between compounding frequency and future value.

c. What is the maximum future value obtainable given the $13,100 deposit, the 3-year time period, and the 13% nominal annual rate?

Use your findings in Part A to explain.

Part A:

(1) For annual compounding, the future value of René's deposit is $_______(Round to the nearest cent.)

(2) For quarterly compounding, the future value of René's deposit is $______ (Round to the nearest cent.)

(3) For monthly compounding, the future value of René's deposit is $______ (Round to the nearest cent.)

(4) For continous compounding, the future value of René's deposit is $______ (Round to the nearest cent.)

Reference no: EM131962299

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