Updated Solution - 98188

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  • From: Mathematics,
  • Posted on: Thu 13 Oct, 2016
  • Request id: # 79031
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1.

Future Value = 800 * (1 + 0.12)4 + 700 * (1 + 0.12)3 + 600 * (1 + 0.12)2 + 500 * (1 + 0.12)1

Future Value (12%) = 3,174.02

Future Value = 800 * (1 + 0.16)4 + 700 * (1 + 0.16)3 + 600 * (1 + 0.16)2 + 500 * (1 + 0.16)1

Future Value (16%) = 3,386.64

 

4.

Using the formula: 

Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of compounding periods) - 1

 

EAR

10%(Monthly) = 10.4713

12%(Quarterly) = 12.5509

8% (Daily) =  8.3278