Question

r=12% per year , compounded monthly, quarterly, seminaually, yearly
, 2 years

effective interest rate

Answer #1

Effective annual rate ,EAR=((1+r/n)^n )-1

r is nominal interest rate=12%

n is the no of times compounded in year

For monthly compounding n=12,ie every month

EAR=((1+0.12/12)^12)-1

=0.1268=12.68%

For quarterly compounding n=4 times a year.or every three months

EAR=((1+0.12/4)^4)-1=0.1255=12.55%

For semi annual compounding n=2,every six months

EAR=((1+.12/2)^2)-1=0.1236=12.36%

For annual compounding rates remains same EAR=12% since compounding period is annual same time period as EAR.

For compounding in two years n=0.5.That is 1/2 times every year

EAR=((1+.12/.5)^.5)-1=.1135=11.35%

2.
300 dollars is deposited every quarter for seven years.
Interest is 4% per year compounded quarterly.
What is the future value of this annuity.
nearest whole number
4.
Suppose the monthly interest rate is 4.6% / 12 =.003833 (
approximately).
To attain a future value of 40000 dollars in ten years, what
should the monthly deposits be, if interest is compounded
monthly?
2 decimal number, no $ sign.
6.
How many times must a yearly deposit of 1250 dollars...

What effective interest rate per 6 months is equivalent to an
effective 24% per year compounded quarterly?

a. The effective interest
rate is 21.44%. If there are 12 compounding periods per year, what
is the nominal interest rate?
b. What is the effective interest
rate on a continuously compounded loan that has a nominal interest
rate of 25%?
c. Which is the better
investment, a fund that pays 20% compounded annually, or one that
pays 18.5 % compounded continuously?
d. Money invested at 6% per year,
compounded monthly. How money months you need to triple your
money?...

You are quoted a yearly rate 8.25% compounded semi-annually.
What is the effective quarterly rate? A. 8.25% B. 2.0625% C.
4.1675% D. 2.0417%

1- For an annual interest rate of 10% compounded continuously
what it will be the effective annual interest rate?
2. For an annual interest rate of 10% compounded quarterly what
it will be the effective annual interest rate?
3. For a monthly interest rate of 1.2 % compounded quarterly
what it will be the effective annual interest rate?

For an annual interest rate of 11% compounded bi-monthly what
it will be the effective annual interest rate?
For an annual interest rate of 12% compounded semi-annually
what it will be the effective annual interest rate?
For an annual interest rate of 12% compounded every 4 months
what it will be the effective annual interest rate?

Find the interest rates in the following situations.
a. APR = 8%, compounded monthly. Find the effective annual
interest rate.
b. Nominal rate is 10% compounded quarterly. Find the effective
semiannual rate.
c. The effective annual interest rate is 11.02% and compounding
is monthly. Find the nominal interest rate.
d. r = 6% and compounding is monthly. Find the effective
quarterly interest rate.

5. For an annual interest rate of 10% compounded
quarterly what it will be the effective annual interest rate?

Given an interest rate of 12% per year compounded monthly, what
is the value at the date t = 0 of a growing perpetual stream of
$200 monthly payments that begin at the date t = 1 (1st
month) and grows at 0.05% per month till perpetuity? (nearest
integer value)
Select one:
a. $20000
b. $2857
c. $21053
d. -$5000

Your bank offers you a 16% APR compounded quarterly. What is the
effective monthly rate?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 18 minutes ago

asked 18 minutes ago

asked 19 minutes ago

asked 25 minutes ago

asked 31 minutes ago

asked 36 minutes ago

asked 39 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago