Question

Week SCNOW Assignment Calculator Compound interest with compound interest, the interest is added to principal in the calculation of interest in ture periods. This addition of interest to the principal is called compounding. This differs from simple interest, in which inte principal. The frequency with which interest is compounded per year will dictate how many interest computations are required (e. annually is once, semi-annually is twice, and quarterly is four times) Imagine that Boden Co., fearing that you wouldn't take its deal, decides instead to offer you compound interest on the same $20,000 note. How much wil Bolden pay you at the end of three years if interest is com required, round your answers to the nearest cert Principal Annual Amount of Accumulated Amounta End of Year (Principal at Interest (Principal Beginning of Year Beginning of Beginning of Year Annual Amount of Interest) $20,000 $1,800 $21,800 $21,800 If you were given the choice to receive more or less compounding periods, which would you choose in order to maximize your monetary situation More APPLY THE CONCEPTS: Present value of a single amount in the future Asistent a currentemented a m oortant to understand whatvestment woud beregned today in order to yed a required future return. The follow future : 58.000 All work saved Email Instructor Save and

Answer 1

Amount Received at the end of 3 year.

Year	Principal	Annual interest @9%	Accumulated Amount at the end of year
1	20000	1800	21800
2	21800	1962	23762
3	23762	2138.58	25901

If we are Given a option , we should opt more compounding  as it will increase our amount. so more compounding is beneficial from the view point of Lender.