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Future Value of an Annuity for Various Compounding Periods Find the future values of the following...

Future Value of an Annuity for Various Compounding Periods

Find the future values of the following ordinary annuities.

  1. FV of $600 each 6 months for 9 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.

    $   

  2. FV of $300 each 3 months for 9 years at a nominal rate of 12%, compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.

    $   

  3. The annuities described in parts a and b have the same amount of money paid into them during the 9-year period, and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 9 years. Why does this occur?

    -Select-The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a).The annuity in part (a) is compounded less frequently; therefore, more interest is earned on interest.The annuity in part (a) is compounded more frequently; therefore, more interest is earned on interest.The annuity in part (b) is compounded less frequently; therefore, more interest is earned on interest.The annuity in part (b) is compounded more frequently; therefore, more interest is earned on interest.Item 3

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