(Compound interest with non-annual periods) You received a bonus of $4000.
a. Calculate the value of $4000 given that it will be held in the bank for 5 years and earn an annual interest rate of 3 percent.
b. recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly.
c. recalculate parts (a) and (b) using and annual interest rate of 6 percent.
d. recalculate (a) using a time horizon of 10 years at an annual interest rate of 3 percent.
e. What conclusions can you draw when you compare the answers in parts c and d with answers in parts (a) and (b)?
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.