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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Expert Solution
Step 1
We need to compute the future value of $5,000 after 2years, Formula for same is :
= A ( 1 + r)n
Rate = 0.25% per month
Annual rate, r = 0.25% x 12 = 3% p.a
Compounding period = Annually
No. of years, n = 2
Amount, A = $5,000
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