Strayer fin 534 set 2 assignment
2. It will take two years for a sum of money to double if it is growing at a rate of 20% per year, calculated as follows: 2 ^ (100/20) = 2 ^ 5 = 32; so doubling occurs after two years since we are compounding annually and we start at 1x not 0 x; that is, 1x doubled to 2x in one year, then doubled again to 4x in the next year; thus, doubles after two years from starting point which was 1 x originally
3. The future value will be larger if we compound an initial amount more often than annually being that compounding interest can only work if it accrues over time and frequent compounding increases gains exponentially greater than annual compounding when over prolonged periods of time such as 10 or 20 year loans or investments
4..The effective annual rate (EAR or EFF%) for a nominal rate of 12%, compounded semiannually would be 12.36%, compounded quarterly would be 12
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