Non Annual Compounding It is now January 1. You plan to make a total of 5 deposi

Question

Non Annual Compounding It is now January 1. You plan to make a total of 5 deposits of $200 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 8% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. How much will be in your account after 10 years? Round your answer to the nearest cent. $______You must make a payment of $1,400.49 in 10 years. To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 12% with quarterly compounding. How large must each of the 5 payments be? Round your answer to the nearest cent. $_____

Explanation / Answer

a. $2029 [use formula FV = PV(1+r)n ]

b.$ 91 [ use above formula by assuming amount of each 5 payments be x ]

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