Chapter 5, Problem 36P

a.

Summary Introduction

To calculate: Amount in account after 3 years.

Non Annual Compounding:

When the cash flow compounding occurs more than one time in a year than interest rate is divided by number of time compounding occurs in a year. Number of year when multiplied by number of compounding in a year we get compounding period.

b.

Summary Introduction

To calculate: Two amounts required to make a payment of $4,000 on two equal quarterly deposits in a bank that pays 6% interest rate.

Non Annual Compounding:

When the cash flow compounding occurs more than one time in a year than interest rate is divided by number of time compounding occurs in a year. Number of year when multiplied by number of compounding in a year we get compounding period.