Question

Find the amount to which $600 will grow under each of these conditions: 8% compounded annually for 3 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 8% compounded semiannually for 3 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 8% compounded quarterly for 3 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 8% compounded monthly for 3 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 8% compounded daily for 3 years. Assume 365-days in a year. Do not round intermediate calculations. Round your answer to the nearest cent.

Answer 1

Answer:

Future values:

a. $755.83

b. $759.19

c. $760.95

d. $762.14

e. $762.75

Explanation:

a) Data and Calculations:

Present value = $600

Conditions:

1. 8% compounded annually for 3 years:

N (# of periods) = 3

I/Y (Interest per year) = 8

PV (Present Value)  = $600

PMT (Periodic Payment) = $ 0

FV = $755.83

Total Interest = $155.83

2. 8% compounded semiannually for 3 years.

N (# of periods) = 6

I/Y (Interest per year) = 4

PV (Present Value)  = $600

PMT (Periodic Payment) = $ 0

FV = $759.19

Total Interest $159.19

3. 8% compounded quarterly for 3 years.

N (# of periods) = 12

I/Y (Interest per year) = 2

PV (Present Value)  = $600

PMT (Periodic Payment) = $ 0

FV = $760.95

Total Interest $160.95

4. 8% compounded monthly for 3 years.

N (# of periods) = 36

I/Y (Interest per year) = 0.66667%

PV (Present Value)  = $600

PMT (Periodic Payment) = $0

FV = $762.14

Total Interest = $162.14

5. 8% compounded daily for 3 years. Assume 365-days in a year.

N (# of periods) = 1,095

I/Y (Interest per year) = 0.02192%

PV (Present Value)  = $600

PMT (Periodic Payment) = $0

FV = $762.75

Total Interest $162.75