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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Question
use excel
Transcribed Image Text:$7,000 in Victory
will Lionel have i
Expert Solution
Step 1
2. No. of periods to be compounded is 4 periods
compounding changes interest rate for quarterly period as follows:-
Rate=
=2%
Compounding amount= Principal x Table factor
=$500 x 1.0824
=$541.21
3.
For finding number of periods multiply no. of years by no. of times of interest compounded semiannually
Here, no. of periods is 4
Periods= 2 x 8
=16 periods
Rate= 4% / 2= 2%
FV=PV(1+i/r)^n
=7000(1+.04/2)^16
=$9609.50
Lionel Rodgers will have $9609.50 after 8 years
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