Question

eBook Problem Walk-Through Find the amount to which $600 will grow under each of these conditions: 4% compounded annually for 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $   4% compounded semiannually for 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $   4% compounded quarterly for 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $   4% compounded monthly for 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $   4% compounded daily for 5 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent. $   Why does the observed pattern of FVs occur?

Answer 1

a

Future value = present value*(1+ rate)^time

Future value = 600*(1+0.04)^5

Future value = 729.99

b

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+4/(2*100))^2-1)*100

Effective Annual Rate% = 4.04

Future value = present value*(1+ rate)^time

Future value = 600*(1+0.0404)^5

Future value = 731.4

c

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+4/(4*100))^4-1)*100

Effective Annual Rate% = 4.0604

Future value = present value*(1+ rate)^time

Future value = 600*(1+0.040604)^5

Future value = 732.11

d

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+4/(12*100))^12-1)*100

Effective Annual Rate% = 4.0742

Future value = present value*(1+ rate)^time

Future value = 600*(1+0.040742)^5

Future value = 732.6

Please ask remaining parts seperately