(Related to Checkpoint 5.3) (Compound interest with non-annual periods) Your grandmother just gave you $10,000....
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(Related to Checkpoint 5.3) (Compound interest with non-annual periods) Your grandmother just gave you $10,000. a. Calculate the future value of $10,000, given that it will be invested for 5 years at an annual interest rate of 4 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly. c. Now let's look at what might happen if you can invest the money at a rate of 8 percent rather than 4 percent rate; recalculate parts (a) and (b) for an annual interest rate of 8 percent. d. Now let's see what might happen if you invest the money for 10 years rather than 5 years; recalculate part (a) using a time horizon of 10 years (annual interest rate is still 4 percent). e. With respect to the changes in the stated interest rate and length of time the money is invested in parts (c) and (d), what conclusions can you draw? a. What is the future value of $10,000 invested for 5 years at an annual interest rate of 4 percent? (Round to the nearest cent.)
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