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Problem 4-16 Future Value for Various Compounding Periods Find the amount to which $550 will grow under...

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Finance

Problem 4-16
Future Value for Various Compounding Periods

Find the amount to which $550 will grow under each of thefollowing conditions. Do not round intermediate calculations. Roundyour 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 & Explanation Solved by verified expert
4.0 Ratings (710 Votes)

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

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Transcribed Image Text

Problem 4-16Future Value for Various Compounding PeriodsFind the amount to which $550 will grow under each of thefollowing conditions. Do not round intermediate calculations. Roundyour answer to the nearest cent.9% compounded annually for 5 years$   9% compounded semiannually for 5 years$   9% compounded quarterly for 5 years$   9% compounded monthly for 5 years$  

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