Future values of the ordinary annuities

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Reference no: EM131869259

FUTURE VALUE OF AN ANNUITY Find the future values of the following ordinary annuities:

A. FV of $800 paid each 6 months for 5 years at a nominal rate of 7% compounded semiannually. Round your answer to the nearest cent. (PLEASE show all work)

B. FV of $400 paid each 3 months for 5 years at a nominal rate of 7% compounded quarterly. Round your answer to the nearest cent. (PLEASE show all work)

These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur?

Reference no: EM131869259

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