Given $100, you are interested in how much money will you get 1 years later with
ID: 2383705 • Letter: G
Question
Given $100, you are interested in how much money will you get 1 years later with different frequency of compounding. If the stated annual rate is 10%, complete the following table (Use decimal format for percentages. For example, 5% should be written as 0.05) . For dollar amounts, round your answers to 2 decimal places; for effective rates, round your answer to 4 decimal places.
Compounding
Period
Future Value
of $100
Effective
Annual Rate
1 year
110.00
0.10
Semi-annual
Quarterly
Monthly
Continuously
Compounding
Period
Future Value
of $100
Effective
Annual Rate
1 year
110.00
0.10
Semi-annual
Quarterly
Monthly
Continuously
Explanation / Answer
FV=PV*(1+(r/n))n
Semiannual=> 100*(1+5%)^2= 110.25
Quarterly=> 100*(1+2.5%)^4= 110.38
Monthly=> 100*(1+10%/12)^12= 110.47
Continuos Compounding=> A = Pe rt
e = 2.7183
=100*2.7183^(.1*1)= 110.52
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