a. Calculate the future sum of P5,000, given that it will be held in the bank five years at an annual interest rate of 6 percent. b. Recalculate part (a) using a compounding period that is (1) semi-annual and (2) bimonthly. c. Recalculate parts (a) and (b) for a 12 percent annual interest rate. d. Recalculate part (a) using a time horizon of 12 years (annual interest rate is still 6 percent). e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts (c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?
a. Calculate the future sum of P5,000, given that it will be held in the bank five years at an annual interest rate of 6 percent. b. Recalculate part (a) using a compounding period that is (1) semi-annual and (2) bimonthly. c. Recalculate parts (a) and (b) for a 12 percent annual interest rate. d. Recalculate part (a) using a time horizon of 12 years (annual interest rate is still 6 percent). e. With respect to the effect of changes in the stated interest rate and holding periods on future sums in parts (c) and (d), what conclusions do you draw when you compare these figures with the answers found in parts (a) and (b)?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 31P
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Question
a. Calculate the future sum of P5,000, given that it will be held in the bank five years at an
annual interest rate of 6 percent.
b. Recalculate part (a) using a compounding period that is (1) semi-annual and (2) bimonthly.
c. Recalculate parts (a) and (b) for a 12 percent annual interest rate.
d. Recalculate part (a) using a time horizon of 12 years (annual interest rate is still 6 percent).
e. With respect to the effect of changes in the stated interest rate and holding periods on
future sums in parts (c) and (d), what conclusions do you draw when you compare these
figures with the answers found in parts (a) and (b)?
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