Problem 4-17 Present Value for Various Compounding Periods

Find the present value of $375 due in the future under each of the following conditions. Round your answers to the nearest cent.

1. 8% nominal rate, semiannual compounding, discounted back 5 years $
2. 8% nominal rate, quarterly compounding, discounted back 5 years $
3. 8% nominal rate, monthly compounding, discounted back 1 year $

Future Value of an Annuity for Various Compounding Periods

Find the future values of the following ordinary annuities:

1. FV of $800 paid each 6 months for 9 years at a nominal rate of 8%, compounded semiannually. Round your answer to the nearest cent. $
2. FV of $400 paid each 3 months for 9 years at a nominal rate of 8%, compounded quarterly. Round your answer to the nearest cent. $
3. The annuities described in parts a and b have the same amount of money paid into them during the 9-year period and both earn interest at the same nominal rate, yet the annuity in part b earns more than the one in part a over the 9 years. Why does this occur? -Select-The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a). The annuity in part (a) is compounded less frequently; therefore, more interest is earned on interest. The annuity in part (a) is compounded more frequently; therefore, more interest is earned on interest. The annuity in part (b) is compounded less frequently; therefore, more interest is earned on interest. The annuity in part (b) is compounded more frequently; therefore, more interest is earned on interest.Item 3