3]
I]
Future value = present value * (1 + interest rate)number of years
$5100 = $654 * (1 + interest rate)32
interest rate = ($5100 / $654)1/32 - 1
interest rate = 6.63%.
II]
i]
EAR = (1 + (APR / n))n - 1,
where n = number of compounding periods in a year.
Here, n = 4 since there are 4 quarters in a year.
EAR = (1 + (15.2% / 4))4 - 1
EAR = 16.09%.
ii]
With continuous compounding, EAR = ert - 1, where r = APR and t = time in years.
EAR = e0.152*1 - 1
EAR = 16.42%.
city of Business and Economics py you $100 32 years the te of return investors Question...
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