Problem: Future value for various compounding periods. Find the amount to which $500 will grow under each of these conditions:
a.12% compounded annually for 5 years
b.12% compounded semiannually for 5 yrs
c:12 % compounded quarterly for 5 years
d: 12 %compounded monthly for 5 yrs
e. 12% compounded daily for 5 yrs
f. Why does the observed pattern of FVs occur?
Problem: Present value for carious compounding periods. Find the present value of %500 due in the future under each conditions:
a. 12% nominal rate, semiannual compounding, discounted back 5 yrs
b. 12% nominal rate, quarterly compounding, discounted back 5 yrs
c. 12% nominal rate, monthly compounding, discounted back 1 yr
d. Why do the differences in the PVs occur?