# Question: A Calculate the future sum of 5 000 given that

a. Calculate the future sum of $ 5,000, given that it will be held in the bank 5 years at an annual interest rate of 6 percent.

b. Recalculate part (a) using compounding periods that are (1) semiannual and (2) bimonthly.

c. Recalculate parts (a) and (b) for a 12 percent annual interest rate.

d. Recalculate part (a) using a time horizon of 12 years (annual interest rate is still 6 percent).

e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts (c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?

b. Recalculate part (a) using compounding periods that are (1) semiannual and (2) bimonthly.

c. Recalculate parts (a) and (b) for a 12 percent annual interest rate.

d. Recalculate part (a) using a time horizon of 12 years (annual interest rate is still 6 percent).

e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts (c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?

## Answer to relevant Questions

What is the present value of the following future amounts? a. $ 800 to be received 10 years from now discounted back to the present at 10 percent b. $ 300 to be received 5 years from now discounted back to the present at 5 ...Ronnie Rental plans to invest $ 1,000 at the end of each quarter for 4 years into an account that pays 6.4 percent compounded quarterly. He will use this money as a down payment on a new home at the end of the 4 years. How ...You are trying to plan for retirement in 10 years, and currently you have $ 100,000 in a savings account and $ 300,000 in stocks. In addition you plan on adding to your savings by depositing $ 10,000 per year in your savings ...If you were offered $ 1,079.50 10 years from now in return for an investment of $ 500 currently, what annual rate of interest would you earn if you took the offer? Universal Corporation is planning to invest in a security that has several possible rates of return. Given the following probability distribution of returns, what is the expected rate of return on the investment? Also ...Post your question