Topic is over effective rate of interest.
If A(4)=1000 and i_n=0.01n, find A(7)
Let initial amount be P
A(4) = P*(1+i1)(1+i2)(1+i3)(1+i4)
=> 1000 = P*(1+0.01*1)(1+0.01*2)(1+0.01*3)(1+0.01*4)
=> P = $906.17
Hence, A(7) = P(1+i1)(1+i2)(1+i3)(1+i4)(1+i5)(1+i6)(1+i7)
= 906.17*(1+0.01*1)(1+0.01*2)(1+0.01*3)(1+0.01*4)(1+0.01*5)(1+0.01*6)(1+0.01*7)
= $1190.91
Topic is over effective rate of interest. If A(4)=1000 and i_n=0.01n, find A(7)
7. The effective annual interest rate is 1 5%. What is the effective interest rate for two years (accumulated over 2 years with interest over interest)? What is the effective interest rate for ten years (accumulated over 10 years with interest over interest)? a. b. c. Assume interest is compounded monthly. What is the monthly interst rate? d. What is the simple annual interest rate? e. What is the simple interest rate for 2 years? For 10 years?
an annual effective interest rate of 7%. Find the corresponding rates that are equivalent to this annual effective interest rate. Round all responses as Xxxx%. a.) Nominal semiannual interest rate
6. A $1000 bond pays coupons at a rate of one-third of the effective annual interest rate. The present value of the coupons agrees with the present value of the redemption amount. Find the price of the bond.
Problem 2.2 Effective interest rate Given: The nominal interest rate is 7%. You wish to know the difference in the frequency of compounding Find: The effective (annual) interest rate if the nominal interest rate of 7% is compounded (a) quarterly, (b) monthly, (c) weekly, (d) daily, and (e) continuously. Solution:
Problem 2.2 Effective interest rate Given: The nominal interest rate is 7%. You wish to know the difference in the frequency of compounding Find: The effective (annual) interest rate if the nominal interest rate of 7% is compounded (a) quarterly, (b) monthly, (c) weekly, (d) daily, and (e) continuously. Solution
(1 point) Find the effective rate of interest for a) 7% compounded monthly Answer = % b) 8% compounded semiannually Answer = %
4. Find the effective interest rate corresponding to the following stated rates: (a) 5% per year, compounded quarterly. (b) 5% per year, compounded daily. 4. Find the effective interest rate corresponding to the following stated rates: (a) 5% per year, compounded quarterly. (b) 5% per year, compounded daily.
if your effective annual discount rate is 7%, what is your effective quarterly interest rate?
4. Find the effective bimonthly interest rate equivalent to: (a) nominal annual interest of 9%, compounded 6 times per year; (b) nominal annual discount of 6%, compounded quarterly; (c) 1/2 nominal annual interest of 8%, compounded continuously.
Assume that nominal effective interest i(12) = .03. Find ? a) Annual effective interest rate i ? b) Monthly effective interest rate j ? c) Nominal interest rate i(52) compounded weekly. ? d) Nominal discount rate d(365) compounded daily.