Problem 4-16 Future Value for Various Compounding Periods Find the amount to which $550 will grow under...

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Problem 4-16
Future Value for Various Compounding Periods
Find the amount to which $550 will grow under each of thefollowing conditions. Do not round intermediate calculations. Roundyour answer to the nearest cent.
9% compounded annually for 5 years
$
9% compounded semiannually for 5 years
$
9% compounded quarterly for 5 years
$
9% compounded monthly for 5 years
$

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4.0 Ratings (710 Votes)

a.
	Future value	=	P*(1+i)^n	Where,
		=	550*(1+0.09)^5	P	$ 550
		=	$ 846.24	i	0.09
				n	5

b.
	Future value	=	P*(1+i)^n	Where,
		=	550*(1+0.045)^10	P		=	$ 550
		=	$ 854.13	i	9%/2	=	0.0450
				n	5*2	=	10

c.
	Future value	=	P*(1+i)^n	Where,
		=	550*(1+0.0225)^20	P		=	$ 550
		=	$ 858.28	i	9%/4	=	0.0225
				n	5*4	=	20

d.
	Future value	=	P*(1+i)^n	Where,
		=	550*(1+0.0075)^60	P		=	$ 550
		=	$ 861.12	i	9%/12	=	0.0075
				n	5*12	=	60

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Transcribed Image Text

Problem 4-16Future Value for Various Compounding PeriodsFind the amount to which $550 will grow under each of thefollowing conditions. Do not round intermediate calculations. Roundyour answer to the nearest cent.9% compounded annually for 5 years$ 9% compounded semiannually for 5 years$ 9% compounded quarterly for 5 years$ 9% compounded monthly for 5 years$