Question 1: Would you rather have a savings account that pays 5% interest compounded semiannually or one that pays 5% interest compounded daily? Explain.
Now, suppose on July 1st you deposit $10,000 in an account that pays a nominal, or quoted, interest rate of 11.33463 percent, with interest added (compounded) daily.
The calculation in this case is based on one year with 365 days.
How much will you have in your account on October 1st, in 92 days or after 3 months?
Question 2: What is free case flow? Why is it the most important measure of cash flow?