Semi-annual compounding
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Adjust the annual formula for a future value of a single amount at 12 percent for 10 years to a semiannual compounding formula. What are the interest factors (FV IF) before and after? Why are they different?
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Solution Summary
The solution discusses the concept of semi-annual compounding.
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Amount = Principal (1+r)^n, where r is the annual interest rate, n is the number of years.
Thus interest rate factor in case of annual compounding:
r=12%, n=10,
Interest rate ...
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