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Problem 5-23 Future value for various compounding periods

Find the amount to which $400 will grow under each of these conditions:

9% compounded annually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $

9% compounded semiannually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $

9% compounded quarterly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $

9% compounded monthly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $

9% compounded daily for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $

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Why does the observed pattern of FVs occur?

-Select one from below -

The future values increase because as compounding periods per year increase, interest is earned on interest less frequently

The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently

The future values increase because as compounding periods per year increase, interest is earned on interest more frequently

The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently

The future values decrease because as compounding periods per year decrease, interest is earned on interest more frequently