Future Value of Non-Annual Compounding

This blog post discusses the future value of non-annual compounding. It includes two questions and answers, as well as an explanation of the formula for calculating future value.

Questions

1. What is the future value of Rs. 10000 invested today for three years at 11% interest?
2. Explain the future value of non-annual compounding.

Answers

1. The future value of Rs. 10000 invested today for three years at 11% interest is Rs. 13,680.
2. Non-annual compounding occurs when interest is compounded more than once per year. For example, if interest is compounded semi-annually, then interest is earned twice per year. The formula for calculating future value with non-annual compounding is:

   “`
   FV (k,n) = PV(1+k/m)m*n
   “`

   where:

   * FV is the future value
   * PV is the present value
   * k is the annual interest rate
   * m is the number of compounding periods per year
   * n is the number of years