Uses semiannual compounding

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a. ?It is now January 1. You plan to make 5 deposits of $100 each, one every 6 months, with the first payment being made today. If the bank pays a nominal interest rate of 12 percent, but uses semiannual compounding, how much will be in your account after 10 years?

?b. ?Ten years from today you must make a payment of $1,432.02. To prepare for this payment, you will make 5 equal deposits, beginning today and for the next 4 quarters, in a bank that pays a nominal interest rate of 12 percent, quarterly compounding. How large must each of the 5 payments be?

Reference no: EM131296533

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