Question

a. What is the future value in five years of $1,200 invested in an account with an annual percentage rate of 10 percent, compounded annually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Future value $  Not attempted

b. What is the future value in five years of $1,200 invested in an account with an annual percentage rate of 10 percent, compounded semiannually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Future value $  Not attempted

c. What is the future value in five years of $1,200 invested in an account with an annual percentage rate of 10 percent, compounded monthly? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Future value $  Not attempted

d. What is the future value in five years of $1,200 invested in an account with an annual percentage rate of 10 percent, compounded continuously? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Future value $  Not attempted  

Answer 1

a.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$1200*(1.1)^5

=$1200*1.61051

=$1932.61(Approx).

2.We use the formula:
A=P(1+r/200)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=1200(1+0.1/2)^(2*5)

=$1200*1.628894627

=$1954.67(Approx).

c.We use the formula:
A=P(1+r/1200)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$1200(1+0.1/12)^(12*5)

=$1200*1.645308935

=$1974.37(Approx).

d.We use the formula:
A=P(e)^rn
where
A=future value
P=present value
r=rate of interest
n=time period.

e=2.71828

A=$1200(2.71828)^(0.1*5)

=$1200*1.648720716

=$1978.46(Approx).