## Compute the future value - shorter compounding period, Financial Accounting

Assignment Help:

Compute the future value of Rs.5000 at the end of 6 years, whether nominal interest rate is 12 percent and the interest is allocated (payable) quarterly at frequency = 4

Solution:

FVn  = PV (1 + k/m )m*n

FV6 = 5000(1 + .12/4)6*4

= 50000 (1 + .03)24

= 5000 * 2.0328

= 10,164

After 6 years the future value of Rs.5000 on the origin of quarterly compounding would be as Rs.10 164 whereas in condition of semi-annual and yearly compounding the future value would be as

FV6 = 5000(1 + .12/2)6*2

= 50000 (1 + .06)12

= 5000 * 2.0122

= 10,061

FV6 = 5000(1 + .12)6

= 5000(1.9738)

=  9868

This dissimilarity in future value is because of the fact that interest on interest has been computed.

#### What is cs optimal decision, Copper Suppliers, Inc. (CS), is a distributor ...

Copper Suppliers, Inc. (CS), is a distributor of commercial grade copper. CS purchases copper directly from copper mines and then after refining it, sells the refined copper to in

#### Differences between ifrs and us gaap in accounting, 1. Describe the approac...

1. Describe the approach Zetar Plc uses to determine goodwill impairment losses. How does this approach differ from US GAAP? 2. Zetar Plc does not report any research and develo

what are the advantage and disadvantage to mr fish, mr Lobster of forming a partnership rather than a close corporation or a company?

#### Determine the increase in the nominal interest rate, Money demand in an eco...

Money demand in an economy in which no interest is paid on money is M d /P = 500 + 0.2Y - 1000i (a) Suppose that P = 100, Y = 1000, and i = 0.10. Find real money demand, nomi

#### Very difficult financial account question, Ask questSarah is the sole distr...

Ask questSarah is the sole distributor agent in her area for Holmes Kitchen Tiles. Sarah purchases the titles at a trade discount and annually in May receives an agency commission

Uncertainty concerning the business It has been recognised in a variety of studies that the problem of adequately financing SMEs is a problem of uncertainty. A defining feature

#### Explain how firms may use their capital structure, Following the lines of t...

Following the lines of the model by Ross (1977): I. Explain how firms may use their capital structure to generate a signal that conveys credible information about their future

#### Determine the present value of the bonds payable, Mason Co. issued \$860,000...

Mason Co. issued \$860,000 of 5 year, 13% with interest payable semiannually, at a market (efffective) interest rate of 12% Determine the present value of the bonds payable, using t

#### Determine the types of hedging , Go to your assigned corporation's website ...

Go to your assigned corporation's website and access their latest annual report. Answer the following questions regarding their derivative and foreign currency transactions. 1.

#### Revocation, Revocation, alteration and revival of a will 1. A will may ...

Revocation, alteration and revival of a will 1. A will may be revoked or altered by the maker of it at any time when he is competent to dispose of his free property by will.  (