Answered>Order 2240

(Compound Interest with Non annual Periods)

a.         Calculate the future sum of $6,000, given that it will be held in the bank 5 years at an annual interest rate of 6%.

b.         Recalculate part a using a compounding period that is (1) semiannual and (2) bimonthly.

c.         Recalculate parts a and b for a 12% annual interest rate.

d.         Recalculate part a using a time horizon of 12 years (annual interest rate is still 6%).

e.         With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts c and d, what conclusions do you draw when you compare these figures with the answers found in parts a and b?