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Fill this You deposit $300 in an account earning 4% compound interest for 3 years. Find...

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You deposit $300 in an account earning 4% compound interest for 3 years. Find the future value and the interest earned for ea
You deposit $300 in an account earning 4% compound interest for 3 years. Find the future value and the interest earned for each of the following compounding frequencies. Round all answers to two decimal places if necessary. PY C/Y N I/Y Frequency Annually: Semiannually: % Quarterly: % Monthly: Daily: % Frequency PV PMT FV Interest Earned Annually: $ $ $ Semiannually: $ $ $ Quarterly: $ $ $ Monthly: $ $ $ $ Daily: $ $ $ $

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Answer

Computation of Future value and the interest earned for each of the following compounding frequencies:

Future value = Present value*(1+i/m)^(n*m)

where,

n - number of years

m - frequency of compounding in a year

i - rate of interest

Compound Interest =  = P [(1 + i)n – 1]

where,

P = Principal,

i = nominal annual interest rate in percentage terms

n = number of compounding periods.

Frequency P/Y C/Y N I/Y
Annually 1 1 3 4%
Semiannually 1 2 3 4%
Quartely 1 4 3 4%
Monthly 1 12 3 4%
Daily 1 365 3 4%

Where,

N – time in years (for compound interest calculations) OR number of payments made during the term of the annuity (for annuity calculations)

I/Y – nominal annual rate of interest per year (entered as a %; NOT a decimal)

C/Y – number of interest compounding periods per year

P/Y – number of payment periods per year

Frequency PV PMT FV Interest Earned
Annually $300.00 $0.00 $337.46 $37.46
Semiannually $300.00 $0.00 $337.85 $37.85
Quartely $300.00 $0.00 $338.05 $38.05
Monthly $300.00 $0.00 $338.18 $38.18
Daily $300.00 $0.00 $338.25 $38.25

Where,

PV – present value (the amount of money at the beginning of the transaction.)

PMT – Periodic deposit amount

FV – future value (money at the end of the transaction.)

.

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