Answer the following Compound Interest problem using the provided formula ONLY. Show your complete solution. 11. Compound Interest What rate in percent compounded monthly is equivalent to 18% compounded semi-annually? 14. When compounded bi-monthly, P150,000 becomes P223,183 after 5 years. What is the nominal rate of interest?
Answer the following Compound Interest problem using the provided formula ONLY. Show your complete solution. 11. Compound Interest What rate in percent compounded monthly is equivalent to 18% compounded semi-annually? 14. When compounded bi-monthly, P150,000 becomes P223,183 after 5 years. What is the nominal rate of interest?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Answer the following
11. Compound Interest
What rate in percent compounded monthly is equivalent to 18% compounded semi-annually? 14. When compounded bi-monthly, P150,000 becomes P223,183 after 5 years. What is the nominal rate of interest?
Transcribed Image Text:annual
semiannual-
quarterly
bimonthly
-
➜
m = 1
m = 2
m = 4
m = 6
mn
F = P(1+1)
m
r = nominal interest rate
m= number of compounding
periuds per year
mn
n
F = PCI + ²
= PCI+
m
Transcribed Image Text:COMPOUND INTEREST
- both the principal and and interest earn interest.
"interest on top of interest"
n
F = P(1 + i)"
where
F = future worth at the end of
n period
P= present worth or
n= period
1 =
principal
compound interest rate
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