Question

Suppose you had $2600 to invest for 10 years.  Using the table below calculate the value of your investment for the interest rates and compounding periods given  Analyze your results to determine which matters more, the interest rate or the compounding period?

$2600 for 10 years	3.5%	4%	4.5%
Compounded Annually
Compounded Quarterly
Compounded Monthly

Answer 1

Principal = $ 2600 Rate = 3.5 % Time = 10pes When compaunded aunded annually : Value of investment = $2600 (1+3.5) DO = $ 3667.556772 when compounded bzal quarterly : Value of investment = $ 2600 (+ 3.5 ) 10 x4 =$ 368 3.96 2979 when compounded monthly : value of investment = $ 2600 (1+ 3.5 J0x12 3687 696539 1200 When Male = 40% compaunded annually : When Value 4 10 investment P 2600 (14 10X4 = $3848-635141 when compounded quarterly : value of investment = $ 2600 ( 1+ 2000) $3871.045707 when compounded monthy: Valio of investment = $ 2600 (1+inayomis 164973 Rate = 4.5% When compounded Value of investment annually : lit 4.5 = $2600 (1+ 100) = '$ 4037.720497 $4537

when compaunded quarterly Value of investment $2600 1200 (it 4.5 110x6 400 $ 4067.37985 When compounded monthy value of investment = $ 2600 (14 4.5 4.5 10X12 or - $ 4074 · 1812 18 s from the values of the interest to follow investment in each case, it follows that for a fixed rate of interest, the compounding period matters more. But y the rate of interest is increased the compounding beriod period same, then matters. the of rate interest keeping the gate of interest
Here is a solution to your problem.......