Calculate effective 3 years rate after 3 years if interest paid annually
Suppose you receive $100 at the end of each year for the next three years. If the interest rate is 5% per annum (interest paid annually), calculate the effective 3 years rate (total interest over 3 years).
Hint: EFFECT function is not appropriate for this part as it is often used to compute an effective annual interest rate from a nominal interest rate.
Is there a specific excel formula to count it?
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Calculate effective 3 years rate after 3 years if interest paid annually
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Suppose you receive $100 at the end of each year for the next three years. The interest rate is 8% per annum (interest paid annually)Question:Compute the effective 3 years rate (total interest over 3 years) using excel. Hint: EFFECT function is not appropriate for this part as it is often used to compute an effective annual interest rate from a nominal interest rate.
Use Excel to answer this question 3 Part 1 (8 marks) 4 Suppose you receive $100...
Use Excel to answer this
question
3 Part 1 (8 marks) 4 Suppose you receive $100 at the end of each year for the next three years. 5 6 a. (2 marks) 7 If the interest rate is 8% per annum (interest paid annually), what is the present value of these cash flows? 8 9 b. (2 marks) 10 What is the future value in three years of the present value you computed in part (a)? 11 12 c. (2...
A $10000 bond with a coupon rate of 3% paid semi-annually has 6 years to maturity...
A $10000 bond with a coupon rate of 3% paid semi-annually has 6 years to maturity and a semi-annual yield to maturity of 2%. What is the price of this bond? Please give me two solutions of formula calculation and excel calculation
Suppose that the nominal annual interest rate on an investment is 12%. Calculate the effective interest...
Suppose that the nominal annual interest rate on an investment is 12%. Calculate the effective interest rate if compounding occurs continuously. Suppose that the nominal annual interest rate on an investment is 12% Calculate the effective interest rate if compounding occurs monthly.
3) Effective versus nominal interest rates. Bank A pays 4% interest compounded annually on deposits, Bank...
3) Effective versus nominal interest rates. Bank A pays 4% interest compounded annually on deposits, Bank B pays 3.75% compounded semiannually, and Bank C pays 3.5% compounded daily. a) Which bank would you use? Why? b) If you deposited $5,000 in each bank today, how much would you have at the end of 2 years? c) What nominal rate would cause Banks B and C to provide the same effective annual rate as Bank A? d) Suppose you do not...
1. Calculate the real interest rate per annum using the full Fisher equation if the nominal interest rate is 6% per annu...
1. Calculate the real interest rate per annum using the full Fisher equation if the nominal interest rate is 6% per annum and the inflation rate is 2% per annum. A. 3.92% B. 4.00% C. 8.00% D. 8.12% 5. Calculate the simple interest rate per to a nominal interest rate of 4% compounded monthly over a 24 period. A. 3.33% B. 4.00% C. 4.16% D. 6.67% 6. Michael made a deposit of $13,000 exactly 5 years ago into an account...
An initial amount of $300 accumulates to $381.25 after 6 years at a nominal rate of...
An initial amount of $300 accumulates to $381.25 after 6 years at a nominal rate of discount payable 4 times per year. The equivalent effective annual rate of interest is denoted i. Compute the accumulated value of $1000 invested for 30 months at a rate of simple interest of i per annum.
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?
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years...
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years and 7% interest compounded quarterly thereafter. What is the account value after 7 years? Problem 1.9 What is the equivalent effective annual (compound) interest rate in Problem 1.8? Problem 1.10 You deposit $5,000 in an account that earns 5% interest compounded annually in years 1 and 2, and thereafter a continuous rate δ(t) = 2/(t + 1) (t > 0). What is the value...
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years...
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years and 7% interest compounded quarterly thereafter. What is the account value after 7 years? Problem 1.9 What is the equivalent effective annual (compound) interest rate in Problem 1.8? Problem 1.10 You deposit $5,000 in an account that earns 5% interest compounded annually in years 1 and 2, and thereafter a continuous rate δ(t) = 2/(t + 1) (t > 0). What is the value...
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3 Part 1 (8 marks) 4 Suppose you receive $100 at the end of each year for the next three years. 5 6 a. (2 marks) 7 If the interest rate is 8% per annum (interest paid annually), what is the present value of these cash flows? 8 9 b. (2 marks) 10 What is the future value in three years of the present value you computed in part (a)? 11 12 c. (2...
Suppose that the nominal annual interest rate on an investment is 12%. Calculate the effective interest rate if compounding occurs continuously. Suppose that the nominal annual interest rate on an investment is 12% Calculate the effective interest rate if compounding occurs monthly.
3) Effective versus nominal interest rates. Bank A pays 4% interest compounded annually on deposits, Bank B pays 3.75% compounded semiannually, and Bank C pays 3.5% compounded daily. a) Which bank would you use? Why? b) If you deposited $5,000 in each bank today, how much would you have at the end of 2 years? c) What nominal rate would cause Banks B and C to provide the same effective annual rate as Bank A? d) Suppose you do not...
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years and 7% interest compounded quarterly thereafter. What is the account value after 7 years? Problem 1.9 What is the equivalent effective annual (compound) interest rate in Problem 1.8? Problem 1.10 You deposit $5,000 in an account that earns 5% interest compounded annually in years 1 and 2, and thereafter a continuous rate δ(t) = 2/(t + 1) (t > 0). What is the value...
Problem 1.8 You deposit $5,000 in an account earning 5% interest compounded semi-annually for 2 years and 7% interest compounded quarterly thereafter. What is the account value after 7 years? Problem 1.9 What is the equivalent effective annual (compound) interest rate in Problem 1.8? Problem 1.10 You deposit $5,000 in an account that earns 5% interest compounded annually in years 1 and 2, and thereafter a continuous rate δ(t) = 2/(t + 1) (t > 0). What is the value...
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