The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

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Answer 1

Question

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

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Find the future values of the ordinary annuities at the given annual rate r compounded as indicated. The payments are made to coincide with the periods of compounding. (Round your answer to the nearest cent.) PMT = $200, r = 2.7%, compounded semiannually for 25 years

Find the present values of the following ordinary annuities: a. PV of $400 each six months for five years at a simple rate of 12 percent, compounded semiannually b. PV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly c. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same simple rate, yet the present value of the annuity in part (b) is $31.46 greater than the one in part (a). Why does this occur?

Find the future values of the following ordinary annuities:a. FV of $400 paid each 6 months for 5 years at a nominal rate of 12% compounded semiannuallyb. FV of $200 paid each 3 months for 5 years at a nominal rate of 12% compounded quarterlyc. These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur?

Answer 2

Question

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

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Answer 3

Question

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

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Answer 4

Question

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

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Answer 5

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

Answer 6

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

Answer 7

Chapter 4, Problem 18P

a)

Summary Introduction

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

Answer 8

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

Answer 9

b)

Summary Introduction

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

Answer 10

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

Answer 11

c)

Summary Introduction

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

Solution Summary: The author calculates the future value of 400 for 5 years semiannually compounded at a nominal rate of 12%. The present value is 5,374.07.

To determine: The future value of $400 each 6months for 5 years semiannually compounded at the nominal rate of 12%.

To determine: The future value of $200 for each 3 months for 5 years quarterly compounded at a nominal rate of 12%.

To determine: The reason why the annuity in part b acquires 101.75 extra than part a during the 5 years.

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