Ch 5 Practice Q's-Answers

Which of the following is the correct mathematical expression of effective annual rate (EAR)? (m denotes the number of times the interest is compounded during the year.) Multiple choice question. EAR = [1 − (Quoted rate/m)]m + 1 EAR = [1 + (Quoted rate/m)]m − 1 EAR = [1 + (Quoted rate/m)]m + 1 EAR = [1 − (Quoted rate/m)]m − 1

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An interest rate obtained by dividing the nominal rate per year by the number of compounding periods in that year isa. A nominal interest rateb. An effective interest ratec. An effective interest rate only if the compounding period is monthlyd. Either (b) or (c)

The (blank) interest rate is referred to as APR and the (blank) interest rate is the true rate considering compounding periods per year

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Pls show complete steps and both parts or skip it

13 When interest is calculated for periods shorter than a year, the formula to calculate interest is: Multiple Choice   I = P × R × T, where I = interest calculated, P = principal, R = annual interest rate, and T = number of months.   I = P × R × T, where I = interest calculated, P = principal, R = annual interest rate, and T = (number of months ÷ 12).   I = P × R × T, where I = interest calculated, P = principal, R = monthly interest rate, and T = (number of months ÷ 12).   I = (MV − P)/T, where I = interest calculated, MV = maturity value, P = principal and T = number of months.

For the following investment, find the total number of compounding periods and the interest rate per period. Do not enter the percent symbol in your answer. Term of Nominal Interest Compounding Rate per Investment (Annual) Rate (%) Compounded Periods Period (%) 11 years 24 monthly %

Question:334 For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: Annual Rate Number of Years Invested Compoun ded (a) Rate of Interest (b) Number of Periods a. 9% 9 Annually a) ?% b) ? b. 12% 5 Quarterly a) ?% b) ? C. 10% 15 Semiannu a) ?% b) ? 2. In a present value of an annuity of 1 table: Annua Number of I Rate Years Number of Rents Frequency (a) Rate a. 9% 25 of Rents 25 Annually of Interest a) ?% (b) Number of Periods b)? b 10% 15 30 Semi- a) ?% b)? C. 12% 7 28 Quarterly a) ?% b)? On April 1, 2016, John Vaughn purchased appliances from the Acme Appliance Company for $1,200. In order to increase sales, Acme allows customers to pay in installments and will defer any payments for six months. John will make 18 equal monthly payments, beginning October 1, 2016. The annual interest rate implicit in this agreement is 24%. Calculate the monthly payment…

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For the following investment, find the total number of compounding periods and the interest rate per period. Do not enter the percent symbol in your answer. Round percentage answer to two decimal places. Term of Nominal Interest Compounding Rate per Investment (Annual) Rate (%) Compounded Periods Period (%) 8 years quarterly %

Over a given year the force of interest p.a is a linear function of time, falling from 0.15 at the start of the year to 0.12 at the end of the year. The value at the start of the year of the nominal rate of interest per annum on a transaction of 1 month term is: Select one: a. 0.28 O b.0.14 c. 0.07 d. 0.21

3. Use the provided chart to solve this problem.

Investment Analysis The effective rate of interest can be calculated using the formula reff =   1 + r m   m   − 1 where reff is the effective rate of interest, r is the nominal interest rate per year, and m is the number of conversion periods per year. Find the nominal interest rate that, when compounded monthly, yields an effective interest rate of 3%/year. (Round your answer to two decimal places.)

3.8 The following table shows the spot rates of interest over a number of horizons: (b) What is the effective rate of interest earned by this annuity-immediate if it were constant through the whole investment period?  [Hint:  Use the Excel function Rate to compute the rate of interest.] Period of investment (in years) Spot rate (in %) 1           6.00 2           7.00 3           7.75 4           8.25

What is the equivalent rate with semi annual compounding on these financial accounting question?

ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +

What is the effective annual interest rate... Please provide solution this financial accounting question

3a) What is the forward rate? What is the relationship between forward rates and the spot rates? Provide the equation assuming annually compounded rates over two years.

For each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor.1. In a future value of 1 table:     Annual Rate   Number of Years Invested   Compounded   (a) Rate of Interest   (b) Number of Periods a.   11%   10   Annually   enter percentages %   enter the number of periods b.   8%   8   Quarterly   enter percentages %   enter the number of periods c.   10%   19   Semiannually   enter percentages %   enter the number of periods 2. In a present value of an annuity of 1 table: (Round answers to 1 decimal place, e.g. 458,58.1.)     Annual Rate   Number of Years Invested   Number of Rents Involved   Frequency of Rents   (a) Rate of Interest   (b) Number of Periods a.   12%   30   30   Annually   enter percentages %   enter the number of periods b.   11%   16   32   Semiannually   enter percentages %   enter the number…

All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 8%, or 16%. Identify the interest rate that corresponds with each line. VALUE (Dollars) Line A: 01 2 3 4 5 Line B: 6 B Line C: C 7 8 9 10 TIME (Years) Investments and loans base their interest calculations on one of two possible methods: the interest and the interest methods. Both methods apply three variables-the amount of principal, the interest rate, and the investment or deposit period to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables.

3. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called four time-value-of-money variables. Which of the following is not one of these variables? O The present value (PV) of the amount invested O The duration of the investment (N) O The interest rate (I) that could be earned by invested funds O The inflation rate indicating the change in average prices This process requires knowledge of the values of three of

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Estimate the annual percent rate for the add on loan Using the given number of payments and annual interest-rate. Use the formula APR = 2nr/n+1 N= 48; R= 8% APR=???