(Compound interest with non-annual periods). You just received a bonus of $2000.
a. Calculate the future value of $2000, given that it will be held in the bank for 8 years and earn an annual interest rate of 7%.
b. Recalculate part (a) using a compounding. That is (1) semiannual and (2) bimonthly.
c. Recalculate parts (a) and (b) using an annual interest rate of 14%.
d. Recalculate part (a) using a time horizon of 16 years in at an annual interest rate of 7%.
What conclusions can you draw when you compare their answers and parts (c) and (d) with the answers in parts (a) and (b)?-------
a. What is the future value of $2000 in a bank account for 8 years and an annual interest rate of 7%? $_______.
b. What is the future value of $2000 in a bank for 8 years at 7% compounded semiannually? $______.
What is the future value of $2000 in a bank account for 8 years at 7% compounded bimonthly? $______.
c. What is the future value of $2000 in a bank account for 8 years at an annual interest rate of 14%? $_______.
What is the future value of $2000 in a bank account for 8 years at 14% compounded semiannually? $______.
What is the future value of $2000 in a bank account for 8 years at 14% compounded bimonthly? $_______.
d. What is the future value of $2000 in a bank account for 16 years at an annual interest rate of 7%? $_______.