If you invest $20,000 at an annual interest rate of 4.75%, compounded daily, calculate the future-value...
If you invest $20,000 at an annual interest rate of 4.75%, compounded daily, calculate the future-value (FV) of your investment over a 5-year period. Then, go back and calculate the future-value (FV) of your initial $20,000 investment with a discrete-quarterly compounded annual interest rate of 5.25%, over a 10-year period. Finally, all else equal, utilizing the second part of the example’s numeric values-calculate that initial $20,000 investment at the previous annual interest rate of 5.25%; but this time with continuous compounding.
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If you invest $20,000 at an
annual interest rate of
4.75%, compounded daily,
calculate the future-value...
In lecture, Professor Gruber explained discrete compounding interest. Interest can also be compounded continuously. Here we...
In lecture, Professor Gruber explained discrete compounding interest. Interest can also be compounded continuously. Here we explain the difference. Professor Gruber calculated future value as FV = P(1+r)", where P is the principal, r is the interest rate, and t is the term of the contract (often in years). This formula can be generalized to FV = P(1+r/m)mt, where m is the number of compounding periods per year (in lecture, this was 1). That is, after every compounding period, more...
a. For an interest rate of 100% per year compounded continuously, calculate the effective daily, weekly,...
a. For an interest rate of 100% per year compounded continuously, calculate the effective daily, weekly, monthly, quarterly, semiannually, and annually interest rates. b. An investor requires an effective return of at least 12% per year. What is the minimum annual nominal rate that is acceptable for continuous compounding?
What does it mean to say that interest is compounded daily? Assume a 365-day year. Compounded...
What does it mean to say that interest is compounded daily? Assume a 365-day year. Compounded daily means the interest is compounded time(s) a year. х Find the compound interest and future value. Do not round intermediate steps. Round your answers to the nearest cent. Principal Rate Compounded Time $875 5% Annually 9 years The future value is $ and the compound interest is $ х 5 Find the compound interest and future value. Round your answers to the nearest...
You wish to buy a car for $12,000 at a 5% annual interest rate, compounded monthly....
You wish to buy a car for $12,000 at a 5% annual interest rate,
compounded monthly. The loan will be repaid in 5 years with monthly
payments. What is your monthly payment (calculated with the
equations on the next page)? Compare your answer to that obtained
with the built in function, PMT. Be sure to label all cells
appropriately. (There is no need to create a monthly payment table,
simply use the equations on the next page.)
Loans: where: and,...
Suppose you had $2600 to invest for 10 years. Using the table below calculate the value of...
Suppose you had $2600 to invest for 10 years. Using the table below calculate the value of your investment for the interest rates and compounding periods given Analyze your results to determine which matters more, the interest rate or the compounding period? $2600 for 10 years 3.5% 4% 4.5% Compounded Annually Compounded Quarterly Compounded Monthly
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if...
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if $6,000 is deposited initially at 11% annual interest for 7 years, and (2) determine the effective annual rate (EAR) Annual Compounding (1) The future value, Vn, is (Round to the nearest cent.) 2) If the 11% annual nominal rate is compounded annually the EAR is 96 Round to two decimal places Semiannual Compounding (1) The future value, Vn, is (Round to the nearest cent.)...
1. Determine the future value on a savings of $5,000 for 6 years (N) compounded quarterly,...
1. Determine the future value on a savings of $5,000 for 6 years (N) compounded quarterly, at 3% per annum. 2. Determine and compare using same information on #1 above but compounded monthly 3. You have an opportunity to invest your $25,000.00, in a local company that has offered to pay you 8% in the first year, and 9% in the second year. What is the total principal and interest at the end of the second year? Note that interest...
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if...
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if $4,000 is deposited initially at 1 1% annual interest for 6 years, and (2) determine the effective annual rate (EAR) (1) The future value, FVn is (Round to the nearest cent) (2 If the 11% annual nominal rate is compounded annually, the EAR is 96 Round to two decimal places. (1) The future value, FVn, is S(Round to the nearest cent.) (2) If the...
Calculate the future value of the following single amounts. (FV of $1, PV of $1, FVA...
Calculate the future value of the following single amounts. (FV
of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate
factor(s) from the tables provided. Round your answers to 2 decimal
places.)
Future Value Initial Investment 1. $ 8,000 6,000 | 3. 9,000 Annual Rate 10 % 12 % 8% Interest Period Compounded Invested Annually 7 years Semiannually 4 years Quarterly 3 years
Calculate the future value of the following annuities, assuming each annuity payment is made at the...
Calculate the future value of the following annuities, assuming
each annuity payment is made at the end of each compounding period.
(FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate
factor(s) from the tables provided. Round your answers to 2 decimal
places.)
Future Value of Annuity 1. Annuity Payment $ 3,000 6,000 5,000 Annual Rate 7 % 8 % 12 % Interest Period Compounded Invested Annually 6 years Semiannually 9 years Quarterly 5 years...
In lecture, Professor Gruber explained discrete compounding interest. Interest can also be compounded continuously. Here we explain the difference. Professor Gruber calculated future value as FV = P(1+r)", where P is the principal, r is the interest rate, and t is the term of the contract (often in years). This formula can be generalized to FV = P(1+r/m)mt, where m is the number of compounding periods per year (in lecture, this was 1). That is, after every compounding period, more...
What does it mean to say that interest is compounded daily? Assume a 365-day year. Compounded daily means the interest is compounded time(s) a year. х Find the compound interest and future value. Do not round intermediate steps. Round your answers to the nearest cent. Principal Rate Compounded Time $875 5% Annually 9 years The future value is $ and the compound interest is $ х 5 Find the compound interest and future value. Round your answers to the nearest...
You wish to buy a car for $12,000 at a 5% annual interest rate,
compounded monthly. The loan will be repaid in 5 years with monthly
payments. What is your monthly payment (calculated with the
equations on the next page)? Compare your answer to that obtained
with the built in function, PMT. Be sure to label all cells
appropriately. (There is no need to create a monthly payment table,
simply use the equations on the next page.)
Loans: where: and,...
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if $6,000 is deposited initially at 11% annual interest for 7 years, and (2) determine the effective annual rate (EAR) Annual Compounding (1) The future value, Vn, is (Round to the nearest cent.) 2) If the 11% annual nominal rate is compounded annually the EAR is 96 Round to two decimal places Semiannual Compounding (1) The future value, Vn, is (Round to the nearest cent.)...
1. Determine the future value on a savings of $5,000 for 6 years (N) compounded quarterly, at 3% per annum. 2. Determine and compare using same information on #1 above but compounded monthly 3. You have an opportunity to invest your $25,000.00, in a local company that has offered to pay you 8% in the first year, and 9% in the second year. What is the total principal and interest at the end of the second year? Note that interest...
Changing compounding frequency Using annual, semiannual, and quarterly compounding periods, (1) calculate the future value if $4,000 is deposited initially at 1 1% annual interest for 6 years, and (2) determine the effective annual rate (EAR) (1) The future value, FVn is (Round to the nearest cent) (2 If the 11% annual nominal rate is compounded annually, the EAR is 96 Round to two decimal places. (1) The future value, FVn, is S(Round to the nearest cent.) (2) If the...
Calculate the future value of the following single amounts. (FV
of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate
factor(s) from the tables provided. Round your answers to 2 decimal
places.)
Future Value Initial Investment 1. $ 8,000 6,000 | 3. 9,000 Annual Rate 10 % 12 % 8% Interest Period Compounded Invested Annually 7 years Semiannually 4 years Quarterly 3 years
Calculate the future value of the following annuities, assuming
each annuity payment is made at the end of each compounding period.
(FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate
factor(s) from the tables provided. Round your answers to 2 decimal
places.)
Future Value of Annuity 1. Annuity Payment $ 3,000 6,000 5,000 Annual Rate 7 % 8 % 12 % Interest Period Compounded Invested Annually 6 years Semiannually 9 years Quarterly 5 years...
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