Problem 4-18 Future Value of an Annuity for Various Compounding Periods

Find the future values of the following ordinary annuities:

a) FV of $600 paid each 6 months for 10 years at a nominal rate of 16%, compounded semiannually. Round your answer to the nearest cent. $ b) FV of $300 paid each 3 months for 10 years at a nominal rate of 16%, compounded quarterly. Round your answer to the nearest cent. $ c) The annuities described in parts a and b have the same amount of money paid into them during the 10-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 10 years. Why does this occur? Select any 1 from below:

-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