Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 91

Shelly Smith has deposited $25,000 for four years in an account that pays interest at the rate of 8% per annum compounded annually. What is the future value of her investment?

The factor in this case is given by

Thus, the future value of the deposit is

Note 3: Remember that the value of N corresponds to the total number of interest conversion periods, in case interest is being compounded more than once per measurement period. Consequently, the interest rate used should be the rate per interest conversion period. The following example will clarify this issue.