Question

Find the nominal annual rate of interest

a) at which $1500 will grow to $1800 in four years compounded compounded monthly

b) at which money will double in seven years if compounded quarterly

Answer #1

a.

Nominal Interest rate at which $1500 will grow to $1800 in four years is calculated in excel and screen and screen shot provided below:

Nominal Interest rate is 4.66%.

b.

Supose value of deposit today is $100 and future value is $200

Nominal Interest rate at which money will double in seven years is calculated in excel and screen and screen shot provided below:

Nominal Interest rate is 10.03%.

Y is placed in an account which caries a nominal annual interest
rate of 2.4% compounded quarterly for the first 10 years and a
nominal annual discount rate of 3.6% convertible monthly for the
next 5 years. The value of this account 15 years after inception is
$10000. Find Y

Adam deposited $1500 in an account in which interest is
compounded continuously. The annual rate of interest is 2.5 %. How
long does it take for his money to double?

What is the nominal annual rate of interest compounded quarterly
if a loan of $ 25,000 is repaid in seven years by payments of
$2000 made at the end of every six months?

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

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...

5) What is the effective annual interest rate for a loan with a
nominal annual interest rate of 12% if compounded:
semi-annually. Answer ____________________
monthly. Answer _________________________
continuously. Answer _____________________
6) You make a series of quarterly deposits every quarter
starting at the end Quarter 1 and ending at the end of Quarter 36.
The first deposit is $1,100, and each deposit increases by $500
each Quarter. The nominal annual interest rate is 7%, and is
compounded continuously. What is...

Exercise IV (effective and nominal interest rate)
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...

Calculate the Nominal Interest Rate, the Interest Rate per
Compounding Period and the Effective Annual Interest Rate for the
following problems:
1. A Bank is offering a saving account at 3% compounded
monthly.
2. A Credit Card company says their card charges an APY of
8.5619% compounded quarterly.
3. Nomani wants to earn 0.25% per week.

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.

"If you deposit $1400 per MONTH into an account that earns an
ANNUAL nominal interest rate of 11%, compounded monthly, how much
money will you have in 10 years?"

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