5. Under compund interest rate model, suppose effective discount rate is 5% (a) Calculate equivalent effective annual interest rate (b) Calculate equivalent nominal interest rate compounded quarterly (c) Calculate equivalent nominal discount rate compounded daily (assume 365 days per year) (d) Calculate equivalent force of interest (e) Calculate the discount function (f) Find the present value of $5,000 to be paid at the end of 3rd year.
5. Under compund interest rate model, suppose effective discount rate is 5% (a) Calculate equivalent effective annual interest rate (b) Calculate equivalent nominal interest rate compounded quarterly (c) Calculate equivalent nominal discount rate compounded daily (assume 365 days per year) (d) Calculate equivalent force of interest (e) Calculate the discount function (f) Find the present value of $5,000 to be paid at the end of 3rd year.
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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VIEWStep 2: (a)To calculate the equivalent effective annual interest rate (EIR) from the effective discount rate
VIEWStep 3: (b) To calculate the equivalent nominal interest rate compounded quarterly
VIEWStep 4: (c) To calculate the equivalent nominal interest rate compounded daily
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