Question

Question (2): (1x5-5 Marks) 1- Calculate the future value of $12,000 invested today for 3 years if your investment pays 8% compounded semiannually (1.0 Mark) 2- Calculate the present value of $9,000 received 6 years from today if your investment pays 12% compounded quarterly. (1.0 Mark) (3.0 Marks) 3- Calculate the present value of the following annuity stream: a) Ordinary annuity of $5,000 received each year for 5 years if your investment pays 5% (Imark) compounded annually. b) Ordinary annuity of $5,000 received each year for 5 years if your investment pays 8% (Imark) compounded annually. c) Ordinary annuity of $5,000 received each year for 5 years if your investment pays 8% (IMark) compounded semiannually.

Answer 1

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+8/(2*100))^2-1)*100

Effective Annual Rate% = 8.16

Future value = present value*(1+ rate)^time

Future value = 12000*(1+0.0816)^3

Future value = 15183.83

Please ask remaining parts seperately, questions are unrelated