Question

Future Value for Various Compounding Periods

Find the amount to which $550 will grow under each of the following conditions. Do not round intermediate calculations. Round your answer to the nearest cent.

1. 5% compounded annually for 5 years
   $  
   
2. 5% compounded semiannually for 5 years
   $  
   
3. 5% compounded quarterly for 5 years
   $  
   
4. 5% compounded monthly for 5 years
   $  

Answer 1

Answer a 5% compounded annually for 5 years Amount after 5 years = $500 x (1 +0.05)45 = $500 x 1.276282 = $638.14 b 5% compounded semiannually for 5 years Amount after 5 years = $500 x (1 +0.05/2)^5*2 = $500 x 1.280085 = $640.04 C 5% compounded quarterly for 5 years Amount after 5 years = $500 x (1 +0.05/4)^5*4 = $500 x 1.282037 = $641.02 d 5% compounded monthly for 5 years Amount after 5 years = $500 x (1 +0.05/12)^5*12 = $500 x 1.283359 = $641.68