rate positively ..
Ans 1 | correct choices are - | |||||||
An increase in the number of compounding periods per year (for example | ||||||||
the compounding changes from one time per year to 12 time per year) | ||||||||
Decrease in N | ||||||||
Increase in lumsum amount | ||||||||
Decrease in interest rate | ||||||||
Ans 2 | We have to use financial calculator to solve this | |||||||
put in calculator- | ||||||||
Lets assume that amount invested = 100 | ||||||||
therefore | ||||||||
PV | -100 | |||||||
PMT | 0 | |||||||
FV | 200 | |||||||
N | 6 | |||||||
compute I | 12.25% | |||||||
Therefore, answer = Disagree, the true rate is 12.25% |
Which of the following will increase the future value of a lump sum (for example, the...
Thus, if a and b are both correct and you do not put both of these or you include one of the other choices, you will receive 0 points). An increase in the lump sum amount (for example, from $500 to $700). An decrease in the number of compounding periods per year (for example, the compounding changes from four times per year to one time per year). An increase in N A decrease in the lump sum amount (for example,...
Previous Page Next Page Page 4 of 30 Question 4 (3.3 points) Which of the following statements is most correct? The first payment under a 3-year, annual payment, amortized loan for $1,000 will include a smaller percentage (or fraction) of interest if the interest rate is 5 percent than if it is 10 percent. If you are lending money, then, based on effective interest rates, you should prefer to lend at a 10 percent nominal, or quoted, rate but with...
The relationship between the future value of a single sum and the corresponding present value of a single sum is determined by two variables. What are those two variables? O A. conversion rate; length of compounding periods OB. interest rate per compounding period; number of compounding periods O c. interest rate; length of compounding periods OD. conversion rate; number of compounding periods
Find the present value of $300 due in the future under each of these conditions: 13% nominal rate, semiannual compounding, discounted back 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 13% nominal rate, quarterly compounding, discounted back 5 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 13% nominal rate, monthly compounding, discounted back 1 year. Do not round intermediate calculations. Round your answer to the nearest cent....
The formula AEP 1 + describes the accumulated value, A, of a sum of money, P, the principal, after t years at annual percentage rater (in decimal form) compounded n times a year. Complete the table for a savings account subject to n compounding periods per year. Amount Number of Annual Interest Accumulated Timet Invested Compounding Periods Amount in Years $14.500 6.25% $21,000 Rate tx 6.0 years (Do not round until the final answer. Then round to one decimal place...
Definition/Explanation Discounting/Compounding . What is an annuity? What is the difference between an ordinary annuity & annuity due? .How does the FV and PV increase/decrease as the time and interest rates increase/decrease? TVM problems (lump sum problems only) that ask you to solve for the following: o Number of periods o Interest rate o Present Value o Future Value
5.24 Find the present value of $600 due in the future under each of these conditions: 6% nominal rate, semiannual compounding, discounted back 7 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 6% nominal rate, quarterly compounding, discounted back 7 years. Do not round intermediate calculations. Round your answer to the nearest cent. $ 6% nominal rate, monthly compounding, discounted back 1 year. Do not round intermediate calculations. Round your answer to the nearest...
A-PCs :)" The formula AP14 describes the accumulated value. A of a sum of money. P the principal, after tyears at annual percentage rater (in decimal form) compounded n times a year. Complete the table for a savings account subject to n compounding periods per year Amount Number of Annual Interest Accumulated Timet Invested Compounding Periods Rate Amount in Years $11500 6.75% $72 000 years (Do not round until the final answer. Then round to one decimal place as needed)...
28-8: Future Value of an Ordinary Annuity Problem 28-24 Required Lump-Sum Payment To complete your last year in business school and then go through law school, you will need $5,000 per year for 4 years, starting next year (that is, you will need to withdraw the first $5,000 one year from today). Your uncle offers to put you through school, and he will deposit in a bank paying 7.08% interest a sum of money that is sufficient to provide the...
Hints for Solving TVM Problems 1. Use the following chart. One field will be not applicable and one field will be unknown and will need to be solved. Present Value $3,000 Future Value ? Payment N/A Number of Periods 10 years Interest Rate 12% 2. Always multiply the amount by the factor unless you are solving for the payment. For example, with the data above, multiply $3,000 by the FV factor (10,12%). 3. If a problem compounds interest monthly, quarterly...