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3.  Problem 4-31 (Nonannual Compounding) Nonannual Compounding It is now January 1. You plan to make a total...

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Finance

3.  Problem 4-31 (Nonannual Compounding)

Nonannual Compounding

It is now January 1. You plan to make a total of 5 deposits of$400 each, one every 6 months, with the first payment being madetoday. The bank pays a nominal interest rate of 8% butuses semiannual compounding. You plan to leave the moneyin the bank for 10 years. Do not round intermediate calculations.Round your answers to the nearest cent.

  1. How much will be in your account after 10 years?

    $__________________  

  2. You must make a payment of $1,924.06 in 10 years. To get themoney for this payment, you will make five equal deposits,beginning today and for the following 4 quarters, in a bank thatpays a nominal interest rate of 8% with quarterlycompounding. How large must each of the five payments be?

    $__________________  

Answer & Explanation Solved by verified expert
3.6 Ratings (609 Votes)
a EAR 1 stated rateno of compounding periods no of compounding periods 1 100 18210021100 Effective Annual Rate 816 FVAnnuity Due c1 in    See Answer
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