10. Problem 5.23 (Future Value for Various Compounding Periods) B eBook Problem Walk-Through ind the amount to which $400 will grow under each of these conditions: a. 8% compounded annually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 6,258.19 b. 8% compounded semiannually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. 8% compounded quarterly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ d. 8% compounded monthly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ e. 8% compounded daily for 10 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent. $ f. Why does the observed pattern of FVs occur? -Select- -Select- The future values increase because as compounding periods per year increase, interest is earned on interest less frequently. The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently. The future values increase because as compounding periods per year increase, interest is earned on interest more frequently. The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently.
10. Problem 5.23 (Future Value for Various Compounding Periods) B eBook Problem Walk-Through ind the amount to which $400 will grow under each of these conditions: a. 8% compounded annually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 6,258.19 b. 8% compounded semiannually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ c. 8% compounded quarterly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ d. 8% compounded monthly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ e. 8% compounded daily for 10 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent. $ f. Why does the observed pattern of FVs occur? -Select- -Select- The future values increase because as compounding periods per year increase, interest is earned on interest less frequently. The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently. The future values increase because as compounding periods per year increase, interest is earned on interest more frequently. The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:10. Problem 5.23 (Future Value for Various Compounding Periods)
BA
eBook
Problem Walk-Through
Find the amount to which $400 will grow under each of these conditions:
a. 8% compounded annually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
6,258.19
b. 8% compounded semiannually for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
c. 8% compounded quarterly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
d. 8% compounded monthly for 10 years. Do not round intermediate calculations. Round your answer to the nearest cent.
$
e. 8% compounded daily for 10 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.
$
f. Why does the observed pattern of FVs occur?
-Select-
-Select-
The future values increase because as compounding periods per year increase, interest is earned on interest less frequently.
The future values decrease because as compounding periods per year increase, interest is earned on interest more frequently.
The future values increase because as compounding periods per year increase, interest is earned on interest more frequently.
The future values increase because as compounding periods per year decrease, interest is earned on interest more frequently.
The future values decrease because as compounding periods per year decrease, interest is earned on interest more frequently.
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