Effects of Compounding Questions

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Effects of Compounding Questions
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Effects of Compounding

• Calculations
• Determine the values for n, i and A for the
  following investments.
• 8564 at 6, compounded monthly for 5 years
• Find the error and calculate the correct answer.

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Effects of Compounding

• Predicting
• Which requires a smaller principal to grow to 10
  000 in the future and by how much?
• Option C 5, compounded semi-annually, for 10
  years
• Option D 10, compounded semi-annually, for 5
  years

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Effects of Compounding

• Double Your Money
• Dave wants his current savings of 2500 to double
  in 8 years.
• What interest rate, compounded semi-annually,
  will he need to achieve his goal?

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Effects of Compounding

• Canada Savings Bonds
• The investment club plans to buy 2000 in 5-year
  compound interest C-Bonds for the
  savings/low-risk investment. Describe how to
  calculate the future value of the investment
  after 4 years, 7 months and 18 days.

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Effects of Compounding

• Investment
• Why do people choose high-risk, high-return
  investments?
• Which of the following would you consider
  high-risk? Explain.
• Bonds
• Common Stocks
• Mutual Funds