Question

Find the future value of a five-year $106,000 investment that pays 9.25 percent and that has the following compounding periods: (Do not round intermediate calculations, round final answers to 2 decimal places, e.g. 15.25.) Value of investment after 5 years: a. Quarterly, b. Monthly, c. Daily, d. Continuous

Answer 1

a)

Future value PVx(1+r)^n Here, A Interest rate per annum B Number of years C Number of compoundings per per annum A:C Interest rate per period (r) BxC Number of periods (n) Present value (PV) 9.25% 5 4 2.31% 20 106,000 Future value $ 167,447.94 106000/(1+2.31%)^20

b)

Future value PVx(1+r)^n Here, 9.25% 5 A Interest rate per annum B Number of years C|Number of compoundings per per annum A:C Interest rate per period (r) BxC Number of periods (n) Present value (PV) 12 | 0.77% 60 106,000 Future value $ 168,033.88 106000/(1+0.77%)^60

c)

Future value PVx(1+r)^n Here, 9.25% A Interest rate per annum B Number of years C Number of compoundings per per annum A:C Interest rate per period (r) BxC Number of periods (n) Present value (PV) 365 0.03% 1,825 106,000 $ Future value $ 168,322.28 106000/(1+0.03%)^1825

d)

=106000*EXP(9.25%*5)

= $168,332.15

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