Question
You just received a bonus of $3,000. a. Calculate the future value of $3,000, given that...
You just received a bonus of $3,000.
a. Calculate the future value of $3,000, given that it will be
held in the bank for 10 years and earn an annual interest rate of 7
percent.
b. Recalculate part (a) using a compounding period that is (1)
semiannual and (2) bimonthly.
c. Recalculate parts (a) and (b) using an annual interest rate
of 14 percent.
d. Recalculate part (a) using a time horizon of 20 years at an
annual interest rate of 7 percent.
e. What conclusions can you draw when you compare the answers in
parts (c) and (d) with the answers in parts (a) and
(b)?
Homework Answers
Answer #1
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