An investor has the opportunity to make an investment that will provide an effective annual yield of 16.5 percent. She is considering two other investments of equal risk that will provide compound interest monthly and quarterly, respectively. Required: a. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest monthly to ensure that an equivalent annual yield of 16.5 percent is earned? b. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest quarterly to ensure that an equivalent annual yield of 16.5 percent is earned? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. a. Equivalent nominal annual rate-monthly compounding b. Equivalent nominal annual rate-quarterly compounding % %

An investor has the opportunity to make an investment that will provide an effective annual yield of 16.5 percent. She is considering two other investments of equal risk that will provide compound interest monthly and quarterly, respectively. Required: a. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest monthly to ensure that an equivalent annual yield of 16.5 percent is earned? b. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest quarterly to ensure that an equivalent annual yield of 16.5 percent is earned? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. a. Equivalent nominal annual rate-monthly compounding b. Equivalent nominal annual rate-quarterly compounding % %

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

An investor has the opportunity to make an investment that will provide an effective annual yield of 16.5 percent. She is considering
two other investments of equal risk that will provide compound interest monthly and quarterly, respectively.
Required:
a. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest monthly to ensure
that an equivalent annual yield of 16.5 percent is earned?
b. What must be the equivalent nominal annual rate (ENAR) for an investment that will provide compound interest quarterly to ensure
that an equivalent annual yield of 16.5 percent is earned?
Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal
places.
a. Equivalent nominal annual rate-monthly compounding
b. Equivalent nominal annual rate-quarterly compounding
%
%

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