Expert Answers

You just received a bonus of $2,000.
A. Calculate the future value of $2,000 given that it will be held in the bank for 9 years and earn an annual interest rate of 4%
B. Recalculate part A using a compounding period that is (1) semiannual and (2) bimonthly
C. Recalculate parts A & B using an annual interest rate of 8%
D. Recalculate part A using a time horizon of 18 years at an annual interest rate of 4%

E. What conclusions can you draw when you compare the answers in parts C & D with the answer in parts A & B?