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

Answer 1

a.
A	=	P*(1+i)^n		Where,
	=	550*(1+0.03)^5		A	Future value
	=	$ 637.60		P	$        550
				i	3%
				n	5
b.
A	=	P*(1+i)^n		Where,
	=	550*(1+0.015)^10		A	Future value
	=	$ 638.30		P	$        550
				i	3%	/	2	=	0.015
				n	5	x	2	=	10
c.
A	=	P*(1+i)^n		Where,
	=	550*(1+0.0075)^20		A	Future value
	=	$ 638.65		P	$        550
				i	3%	/	4	=	0.0075
				n	5	x	4	=	20
d.
A	=	P*(1+i)^n		Where,
	=	550*(1+0.0025)^60		A	Future value
	=	$ 638.89		P	$        550
				i	3%	/	12	=	0.0025
				n	5	x	12	=	60