Question

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)

Answer 1

1)

Effective annual rate is 12.25%

APR = [(1+EAR)^(1÷n)-1]×n
n is number of compounding per year
	Quarterly compounding	11.72%	((1+12.25%)^(1/4)-1)*4

Hence, Nominal rate of interest convertible quarterly is 11.72%