Question

An investment promises to quadruple your money in nine years. If the interest is compounded monthly, what effective annual rate would you earn? (Hint: Calculate the monthly rate and convert that to the effective annual rate, EAR.) A. 25.99% B. 16.65% C. 18.92% D. 21.90% E. 31.95% F. 41.42%

Answer #1

1.An investment will quadruple your money in 12 years. What is
the nominal rate of interest convertible quarterly?
Answer = % (3 Sig Fig)
2.AJ takes out a small business loan of $15000 at a nominal rate
of interest of 10.6% convertible quarterly. One year later, he
repays $ 3500. Two years after that, the bank wants to sell AJ's
loan to another institution. How much does AJ owe at that
time?
Answer = dollars. (3 Sig Fig)

1. What nominal rate compounded annually would
quadruple the principal in 4
years?
2. A master card compounds monthly and charges an interest of 1.5%
per month.
What is the effective interest rate per year?
3. How long will it take money to triple itself if invested at 8%
compounded
annually?
4. Microsoft CEO, billionaire Bill Gates willed that a sum of $25
million be given to a
child but will be held in trust by the child’s mother until...

you
are considering an investment that has a nominal annual interest
rate of 7.88percent compounded semiannually .therefore the
effective annual rate or EAR (anual percentage yield)is....

.A risk-free investment promises to pay you $550 every 6 months
for the next 11 years. If you can earn 9.5% on your money, how much
would you be willing to pay for this investment?
You want to retire and have annual payments of $50,000 over a 20
year period. You plan to retire in 17 years. If you can earn 7.5%
on your funds, how much do you need to invest monthly until you
retire to reach your goal?...

1a) Lucy invested $950 five years ago. Her investment paid 7.2%
interest compounded monthly. Lucy's twin sister Laurie invested
$900 at the same time. But Laurie's investment earned 8% interest
compounded quarterly. How much is each investment worth today?
1b) Carl is considering the purchase of an investment that will
pay him $12,500 in 12 years. If Carl wants to earn a return equal
to 7% per year (annual compounding), what is the minimum amount he
should be willing to...

Compute the effective annual rate of interest
a) for 6% compounded monthly
b) at which $1100 will grow to $2000 in seven years if
compounded monthly

Five years ago, you put $20,000 into an interest-earning
account. The interest rate is compounded monthly. Today your
deposit is worth $30,000. What is the effective annual interest
earned on the account? please show how to solve using finance
calculator.

For a deposit of $1027 at 6.4% over 2 years, find the
interest earned if interest is compounded semiannually,
quarterly, monthly, daily, and continuously.
The interest earned if interest is compounded semiannually
is----
2
Find the present value of the following future amount.
$2000 at 10% compounded annually for 30 years
The present value is-----
3 Suppose a savings and loan pays a nominal rate of
1.4%
on savings deposits. Find the effective annual yield if interest
is compounded quarterly...

Fifteen years ago, you deposited $12,500 into an investment
fund. Five years ago, you added an additional $20,000 to that
account. You earned 8%, compounded semi-annually, for the first ten
years, and 6.5%, compounded annually, for the last five years.
Required:
a) What is the effective annual interest rate (EAR) you would
get for your investment in the first 10 years?
b) How much money do you have in your account today?
c) If you wish to have $85,000 now,...

. Nonannual compounding period
The number of compounding periods in one year is called
compounding frequency. The compounding frequency affects both the
present and future values of cash flows.
An investor can invest money with a particular bank and earn a
stated interest rate of 6.60%; however, interest will be compounded
quarterly. What are the nominal, periodic, and effective interest
rates for this investment opportunity?
Interest Rates
Nominal rate
Periodic rate
Effective annual rate
You want to...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 9 minutes ago

asked 15 minutes ago

asked 16 minutes ago

asked 32 minutes ago

asked 36 minutes ago

asked 40 minutes ago

asked 47 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago