What is the future value and the effective interest rate

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Reference no: EM131197908

What is the future value of $1,000 payable five years from now, and the effective interest rate, i_eff, at a nominal interest rate of 12% per year compounded

a) annually

b) quarterly

c) monthly

d) daily

e) continuously?

f) Explain in one or two sentences why you get higher future values as you move from a) through e).

It will be helpful to draw a cash flow diagram, or other relevant figure, to guide my thinking.

For questions that ask for an answer involving words please respond in complete and concise sentences.

Please state explicitly any assumptions that you think you need to solve a problem.

Unless specified otherwise, all interest rates in this problem are compound interest rates

Reference no: EM131197908

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