a.
To determine: The
Continuous Compounding:
Continuous compounding is the condition when interest is earned continuously and not annually, quarterly or half yearly. It is the maximum limit of an interest that could be reached on a given interest rate.
Given,
Present value is $1,900.
Number of years is 9 years.
Rate of interest is 12% per annum compounded continuously.
b.
To determine: The future value of $1,900 continuously compounded for 5 years at an annual percentage rate of 8%.
Given,
Present value is $1,900.
Number of years is 5 years.
Rate of interest is 8% per annum compounded continuously.
c.
To determine: The future value of $1,900 continuously compounded for 17 years an annual percentage rate of 5%.
Given,
Present value is $1,900.
Number of years is 17 years.
Rate of interest is 5% per annum compounded continuously.
d.
To determine: The future value of $1,900 continuously compounded for 10 years at an annual percentage rate of 9%.
Given,
Present value is $1,900.
Number of years is 10 years.
Rate of interest is 9% per annum compounded continuously.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
UPENN: LOOSE LEAF CORP.FIN W/CONNECT
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education