For each of the following cases, find the future value at the end of the deposit

Question

For each of the following cases, find the future value at the end of the deposit period at the given nominal inlerest rate Number of Compounding Periods in the Year (m) Nominal Initial Deposit (S) Deposit Future Periods (Yrs) Value ($) Ra 18 12 2 200 20 12 Number of Nominal Interest Rate (96) 18 12 Compounding Periods in Deposit Future Periods (Yrs)Value (s) Initial the Year (m) Deposit ($) Round to the nearest cent) (Round to the nearest cent) Round to the nearest cent) 20 12 Enter your answer in each of the answer boxes OType here to search

Explanation / Answer

Answer a.

Initial Deposit = $400
Nominal Interest Rate = 18%
Deposit period = 6 years

Future Value = $400 * (1 + 0.18)^6
Future Value = $400 * 1.18^6
Future Value = $1,079.82

Answer b.

Initial Deposit = $200
Nominal Interest Rate = 12%
Semi-annual Interest Rate = 6%
Deposit period = 20 years (40 semi-annual period)

Future Value = $200 * (1 + 0.06)^40
Future Value = $200 * 1.06^40
Future Value = $2,057.14

Answer c.

Initial Deposit = $600
Nominal Interest Rate = 8%
Monthly Interest Rate = 8%/12 = 0.667%
Deposit period = 2 years (24 months)

Future Value = $600 * (1 + 0.00667)^24
Future Value = $600 * 1.00667^24
Future Value = $703.79

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