CHAPTER 2

d. The continuously compounded equivalent to an 8% annually compounded rate is approximately 7.7% , because: e0.0770 = 1.0800. Thus: This result is greater than the answer in Part (c) because the endowment is now earning interest during the entire year. 26. With annual compounding: FV = $100 ( (1.15)20 = $1,636.65 ................
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