You just received a $5,000 bonus. a. Calculate the future value of $5,000, given that it will be held in the bank for five years and earn an annual interest rate of 6 percent. b. Recalculate part a using a compounding period that is (1) semiannual and (2) bimonthly. c. Recalculate parts a and b using a 12 percent annual interest rate. d. Recalculate part a using a time horizon of 12 years at a 6 percent interest rate. e. What conclusions can you draw when you compare the answers to parts c and d with the answers to parts a and b?
You just received a $5,000 bonus. a. Calculate the future value of $5,000, given that it will be held in the bank for five years and earn an annual interest rate of 6 percent. b. Recalculate part a using a compounding period that is (1) semiannual and (2) bimonthly. c. Recalculate parts a and b using a 12 percent annual interest rate. d. Recalculate part a using a time horizon of 12 years at a 6 percent interest rate. e. What conclusions can you draw when you compare the answers to parts c and d with the answers to parts a and b?
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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You just received a $5,000 bonus.
a. Calculate the future value of $5,000, given that it will be held in the bank for five years and earn an annual interest rate of 6 percent.
b. Recalculate part a using a compounding period that is (1) semiannual and (2) bimonthly.
c. Recalculate parts a and b using a 12 percent annual interest rate.
d. Recalculate part a using a time horizon of 12 years at a 6 percent interest rate.
e. What conclusions can you draw when you compare the answers to parts c and d with the answers to parts a and b?
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