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If your opportunity cost of capital is 12%. What is the future value of $500 in...

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Question

Finance

If your opportunity cost of capital is 12%. What is the futurevalue of $500 in 5 years if it

is compounded:

a. Annually

b. Semi-annually

c. Quarterly

d. Monthly

Why is there a difference in the balances between the investmentcompounded quarterly

to the one compounded annually?

Answer & Explanation Solved by verified expert
3.9 Ratings (717 Votes)
cost of capital 12 Present value PV 500 Time 5 years Annually annual rate r 12 number of periods n 5 Future value is calculated using the formula FV PV1rn    See Answer
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Transcribed Image Text

If your opportunity cost of capital is 12%. What is the futurevalue of $500 in 5 years if itis compounded:a. Annuallyb. Semi-annuallyc. Quarterlyd. MonthlyWhy is there a difference in the balances between the investmentcompounded quarterlyto the one compounded annually?

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