# Question

You just received a $5,000 bonus.

a. Calculate the future value of $5,000, given that it will be held in the bank for five years and earn an annual interest rate of 6 percent.

b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly.

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

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

e. What conclusions can you draw when you compare the answers in parts (c) and (d) with the answers in parts (a) and (b)?

a. Calculate the future value of $5,000, given that it will be held in the bank for five years and earn an annual interest rate of 6 percent.

b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly.

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

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

e. What conclusions can you draw when you compare the answers in parts (c) and (d) with the answers in parts (a) and (b)?

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