Question

Find the amount to which $500 will grow under each of these conditions:

1. 4% compounded annually for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

2. 4% compounded semiannually for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

3. 4% compounded quarterly for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

4. 4% compounded monthly for 4 years. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

5. 4% compounded daily for 4 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.
   $  

Answer 1

Future value is computed as follows:

= Present value x (1 + r)ⁿ

a. The amount will be computed as follows:

= $ 500 x 1.04⁴

= $ 584.93

b. The amount will be computed as follows:

= $ 500 x (1 + 0.04 / 2) ^{2 x 4}

= $ 500 x 1.02⁸

= $ 585.83

c. The amount will be computed as follows:

= $ 500 x (1 + 0.04 / 4) ^{4 x 4}

= 500 x 1.01¹⁶

= $ 586.29

d. The amount will be computed as follows:

= $ 500 x (1 + 0.04 / 12) ^{4 x 12}

= $ 500 x 1.00333333⁴⁸

= $ 586.60

e. The amount will be computed as follows:

= $ 500 x (1 + 0.04 / 365) ^{4 x 365}

= $ 500 x 1.000109589¹⁴⁶⁰

= $ 586.75