HW ck to Assignment ttempts: 0 Do No Harm: 0/1 1. Problem 5.36 (Nonannual Compou
ID: 2810104 • Letter: H
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HW ck to Assignment ttempts: 0 Do No Harm: 0/1 1. Problem 5.36 (Nonannual Compounding) eBook a. You plan to make five deposits of $1,000 each, one every 6 months, with the first payment being made in 6 months. You will then make no more deposits. If the bank pays 5% nominal interest, compounded semiannually, how much will be in your account after 3 years? Do not round intermediate calculations. Round your answer to the nearest cent. n a bank that pays 5% b. One year from today you must make a payrment of $12,000. To prepare for this payment, you plan to make two equal quarte y deposits at the end of Quarters 1 and nominal interest compounded quarterly. How large must each of the two payments be? Do not round intermediate calculations. Round your answer to the nearest cent. Grade It Now Save & Continue Continue without saving O Type here to searchExplanation / Answer
a. N = 5, PV = 0, PMT = 1000, rate = 2.5%
use FV funciton in Excel
value after 2.5 years = 5256.3285
value after 3 years = 5256.3285 * 1.025 = 5,387.74
b. Value after two quarters = 12,000/1.01252 = 11,421.7728
FV = 11,421.7728, PV = 0, N = 2, PMT = 1.25%
use PMT funciton in Excel
quarterly payments = 5,675.42
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