d Score 0 of 1 pt 301 15s complete HW Score 3LO22 Static For

d Score: 0 of 1 pt 301 15(s complete) HW Score: 3.LO2.2 (Static) For each of the following cases, find the future value at the end of the deposit period at the given nominal interest rate. Number of Compounding Periods in the Year (m) Nominal Interest Deposit Future Periods 21 Initial D (Yrs),\"que (S) Rate (%) 16 posit (5) 400 200 500 12 Number of Compounding Periods in the Year (m) Nominal Interest Initial Deposit Future Deposit ($) 400 Rate (%) 16 Periods (Yrs) Value (5) Lj (Round to the nearest cent) r anewer in the answer box and then click Check Arswer

Solution

Answer to Problem 3.LO2.2:

Answer a.

Initial Deposit = $400
Annual Interest Rate = 16%
Deposit Period = 6 years

Future Value = Initial Deposit * (1 + Interest Rate)^Period
Future Value = $400 * 1.16^6
Future Value = $974.56

Answer b.

Initial Deposit = $200
Annual Interest Rate = 9%
Semiannual Interest Rate = 4.50%
Deposit Period = 21 years
Semiannual Period = 42

Future Value = Initial Deposit * (1 + Interest Rate)^Period
Future Value = $200 * 1.045^42
Future Value = $1,270.32

Answer c.

Initial Deposit = $500
Annual Interest Rate = 7%
Monthly Interest Rate = 0.583%
Deposit Period = 3 years or 36 months

Future Value = Initial Deposit * (1 + Interest Rate)^Period
Future Value = $500 * 1.00583^36
Future Value = $616.39

Answer to Problem 3.LO2.3:

Cash Flows:
Year 1 = $15,000
Year 2 = $9,100
Year 3 = $7,100

Annual Interest Rate = 7%

Future Value = $15,000 * 1.07^2 + $9,100 * 1.07 + $7,100
Future Value = $34,010.50