Calculate the future sum of $6,000, given that it will be held
Subject: Business / Finance
Question
(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?
