An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest O...

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An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest O 12.00

An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest. 12.00% 9.58 % 7.97 % 6.8

business economics

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Answer 1

Answer #1

Bimonthly means every two months. So,

Number of compounding periods in 6 years=n=6*6=36

Let the bimonthly interest rate be i

Present value of investment=PV=$1000

Future value of investment=FV=$1608.44

We know that

FV=PV*(1+i)^n

1608.44=1000*(1+i)^36

i=(1608.44/1000)^(1/36)-1=0.013289

Nominal interest rate=number of compounding per year*i=6*0.013289=7.97%

Correct option is

7.97%

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Answer 2

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An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest O...

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An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest O...

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Add Answer to: An amount of $1,000 becomes $1,608.44 after 6 years compounded bimonthly. Find the nominal interest O...

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