Question

Problem 4-16
Future Value for Various Compounding Periods

Find the amount to which $550 will grow under each of the following conditions. Do not round intermediate calculations. Round your answer to the nearest cent.

1. 9% compounded annually for 5 years
   $   
   
2. 9% compounded semiannually for 5 years
   $   
   
3. 9% compounded quarterly for 5 years
   $   
   
4. 9% compounded monthly for 5 years
   $  

Answer 1

a.
	Future value		=	P*(1+i)^n		Where,
			=	550*(1+0.09)^5		P	$        550
			=	$ 846.24		i	0.09
						n	5
b.
	Future value		=	P*(1+i)^n		Where,
			=	550*(1+0.045)^10		P		=	$                550
			=	$ 854.13		i	9%/2	=	0.0450
						n	5*2	=	10
c.
	Future value		=	P*(1+i)^n		Where,
			=	550*(1+0.0225)^20		P		=	$                550
			=	$ 858.28		i	9%/4	=	0.0225
						n	5*4	=	20
d.
	Future value		=	P*(1+i)^n		Where,
			=	550*(1+0.0075)^60		P		=	$                550
			=	$ 861.12		i	9%/12	=	0.0075
						n	5*12	=	60