Why does the future value of a given amount increase when interest is compounded nonannually as opposed to
annually?
What will be an ideal response?
Because "interest is earned on interest" more frequently as the length of the compounding period declines, there is an
inverse relationship between the length of the compounding period and the effective annual interest rate (and future
value): The shorter the compounding period is, the higher the effective interest rate will be (and the higher the future
value will be). Conversely, the longer the compounding period is, the lower the effective interest rate will be (and the
lower the future value will be).
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Which of the following is true with regard to price?
A) Historically, price has had the least perceptible impact on buyer choice. B) Price is the least flexible element in the marketing mix. C) Unlike product features and channel commitments, prices cannot be changed quickly. D) Price is the sum of all the values that customers give up to gain the benefits of having a product. E) Prices only have an indirect impact on a firm's bottom line.
U.S. GAAP classifies all of the following as investing activities on the statement of cash flows except for
a. cash inflows from selling manufacturing equipment. b. cash outflows from purchasing bonds (intended to be held to maturity) of other entities. c. cash outflows to lender for interest. d. cash inflows from selling a (long-term) portfolio of equity securities of other entities. e. cash outflows from buying manufacturing equipment.
States do not impose death taxes
Indicate whether the statement is true or false.
When a buyer receives an invoice for $100 with terms of "2/15 net 30" she can expect to pay
A. less than $100 if she pays during the first 15 days. B. more than $100 if she pays between day fifteen and day thirty. C. the full $100 if she waits more than 30 days to pay. D. $100 if she pays anytime during the first fifteen days. E. $100 if she pays anytime in the first 30 days.