Question

a. Convert 3% simple monthly rate into simple annual rate.

b. Convert 6% simple annual rate into annual rate, compounded monthly.

c. Convert 9% annual rate compounded monthly into annual rate, compounded daily.

d. Convert 12% annual rate, compounded weekly into simple annual rate.

e. Convert 15% simple annual rate into annual rate, compounded semi-annually.

Show all work. Label and clearly explain your answer.

Answer #1

As per rules I am answering the first 4 subparts of the question

a: Simple annual rate= Simple monthly rate*12 = 3%*12 = 36%

b: Annual rate compounded monthly = (1+r/m)^m-1

where r is the nominal rate and m is the frequency of compounding

= (1+6%/12)^12-1

=6.17%

c:

First find the effective rate of 9% compounded monthly as (1+9%/12)^12-1=0.093807

Find the rate which when compounded daily gives the same effective rate

Daily compounded rate=r

(1+r)^(365)-1 = Effective rate

(1+r)^(365)= 1.093807

r= 0.000245685

Daily compounded rate= 0.000245685*365= 8.97%

d: Annual rate= (1+r/m)^m-1

= (1+12%/52)^52-1

= 1.002308^52-1

= 12.73%

a. Convert 3% simple monthly rate into simple annual rate. b.
Convert 6% simple annual rate into annual rate, compounded monthly.
c. Convert 9% annual rate compounded monthly into annual rate,
compounded daily. d. Convert 12% annual rate, compounded weekly
into simple annual rate. e. Convert 15% simple annual rate into
annual rate, compounded semi-annually.
Show Work

Convert 15% simple annual rate into
annual rate, compounded semi-annually.
Show all work. Label and clearly
explain your answer. No excel or calculators.

Convert 9% annual rate compounded monthly into annual rate,
compounded daily

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?

Which one of the following has the highest effective annual
rate?
Question 9 options:
1)
6 percent compounded annually
2)
6 percent compounded quarterly
3)
6 percent compounded semiannually
4)
6 percent compounded monthly
5)
6 percent compounded weekly

3. How much will the future value of an annual annuity of $35 be
worth after 13 years at 3% interest if interest is compounded
annually, semi-annually, quarterly, monthly and daily? Fill in the
table below with your answers. Hint: if the compounding is
annually, there is one $35 payment in a year, if the compounding is
semi-annually, there are two $17.50 payments in a year, etc..
Annual Semi-annual Quarterly Monthly Daily

What is the effective monthly interest rate for a loan with a 8%
nominal annual interest rate if the loan is compounded
(a) monthly, (b) daily, or
(c) continuously?
A friend offers you a loan at an effective daily interest rate
of 0.2%. (a) What is the nominal (also known as
the APR or Annual Percentage Rate) rate for this loan?
(b) What is the effective annual interest rate for
his loan?
Show all work please

What is the monthly payment on a 15 year, $350,000 mortgage
loan, where interest rate is 3% per year,
Compounded annually
Compounded monthly
Compounded daily
What are effective annual rates for 1,2, and 3 above?

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...

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

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