Homework Answers
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All the above are correct since all of them will give the same answer. Below example proves the same. Rate is 10% and PV is 100.
a) 100 (1+10/100) + 100(1+10/100)(10/100) = 100(1.1)+100(1.1)(.10)= 110+11 = $121
b)100(1+10/100)(1+10/100) = 100*1.1*1.1= $121
c)100(1+10/100)^2 = 100(1.1)^2= $121
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