Calculate the future value of $5 comma 000, given that it will be held in the bank for 5 years and earn an annual interest rate of 6 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly. c. Recalculate parts (a) and (b) using an annual interest rate of 12 percent. d. Recalculate part (a) using a time horizon of 12 years at an annual interest rate of 6 percent. e. What conclusions can you draw when you compare the answers in parts (c) and (d) with the answers in parts (a) and (b)?

A $6,691.13

semiannual Amount$6,719.58

bimonthly Amount$6,739.24

IF bimonthly:

Principal5,000.00

time30.00

rate0.01000

Amount6,739.24

IF rate is 12%

yearly Amount8,811.71

semiaanual Amount8,954.24

bimonthly  Amount9,056.81

IF time is 12 years:

yearly Amount         10,060.98

semiannual Amount10,163.97

bimonthly Amount10,235.50

As time horizon increase

as subperiord of capitalization increases

or as rate increases

the final future value increases as well.

Explanation:

Principal5,000.00

time5.00

rate0.06000

Amount6,691.13

IF semminannual:

Principal5,000.00

time10.00

rate0.03000

Amount6,719.58

IF bimonthly:

Principal5,000.00

time30.00

rate0.01000

Amount6,739.24

IF rate is 12%

Amount8,811.71

semiaanual:

Amount8,954.24

bimonthly:

Amount9,056.81

IF time is 12 years:

Amount10,060.98

semiannual:

Amount10,163.97

bimonthly:

Amount10,235.50

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