Help with Questions

1. How does monthly compounding compare to daily compounding?

2. How does annual compounding compare to semiannual compounding?

3. Does IRR take into account the time value of money?

4. A friend asks whether he should open a savings account that pays 5 percent interest compounded semiannually or one that pays 5 percent interest compounded daily? What would you tell him or her, and why? Be sure to explain the role that the time value of money plays in your response.