Question

Assume you make monthly deposits of $200 starting 1 month from now into an account that pays 6% per year, compounded semiannually. If you want to know how much you will have after 4 years, the value of i you should use in the F/A factor, assuming no interperiod interest, is: (a) 0.5% (b) 3.00% (c) 6.0% (d) 12.0%

Name: assume you make monthly deposits of 200 starting 1 month from now into an account that pays 6 per year compounded semiannually if you want to know how much you will have after 4 years the va 55905
Uploaded: 2022-06-21T16:52:44-08:00
Duration: 1 min 33 s
Channel: Lottie Adams
Description: assume you make monthly deposits of 200 starting 1 month from now into an account that pays 6 per year compounded semiannually if you want to know how much you will have after 4 years the va 55905

          Assume you make monthly deposits of $200 starting 1 month from now into an account that pays 6% per year, compounded semiannually. If you want to know how much you will have after 4 years, the value of i you should use in the F/A factor, assuming no interperiod interest, is: (a) 0.5% (b) 3.00% (c) 6.0% (d) 12.0%

Added by Derek S.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Lottie Adams

06/21/2022

Step 1

Given i = 6% and compounding semiannually (m = 2), we have: E = (1 + 0.06/2)^2 - 1 E = (1 + 0.03)^2 - 1 E = (1.03)^2 - 1 E = 1.0609 - 1 E = 0.0609 or 6.09% Show more…

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Assume you make monthly deposits of $200 starting 1 month from now into an account that pays 6% per year, compounded semiannually. If you want to know how much you will have after 4 years, the value of i you should use in the F/A factor, assuming no interperiod interest, is: (a) 0.5% (b) 3.00% (c) 6.0% (d) 12.0%