Question

Find the future value of a five-year $90,000 investment that pays 5.00 percent and that has the following compounding periods: (Do not round intermediate calculations, round final answers to 2 decimal places, e.g. 15.25.) Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Value of investment after 5 years a. Quarterly __ पी b. Monthly पी c. Daily पी d. Continuous पी

Answer 1

Future value = Present value X (1+i=n)^nt a) Quarterly compounding: Future value = FV = $90,000 X (1+5%/4)^(4x5) $115,383.35 b) Monthly compounding: Future value = FV = $90,000 X (1+5%/12)^(12x5) $115,502.28 c) Daily compounding: Future value = FV = = $90,000 X (1+5%/365)^(365x5) $115,560.31 d) continuously compounded: Future value = FV = $90,000 x e^(0.05x5) = $115,562.29