Question 2 Once again, suppose that on January 1, 2019, you invest $1,000 in an...
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Question 2 Once again, suppose that on January 1, 2019, you invest $1,000 in an account that pays 5% interest. As before, you have plans to withdraw $300 after one year and to deposit an additional $1,000 after two years. However, in this case, lets assume that interest is paid AND compounded TWICE each year (i.e. semiannually). Does this change the rate which money accumulates in your account? What is the amount? Does your number show that semiannual compounding resulting in a higher balance? Semiannual Compounding you are effectively earning a higher rate of interest than when interest compounds just once per year. In other words, you should se the true rate of interest is GREATER than the 5% stated rate
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