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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Could u pls help
![Suppose you plan to put money in a bank account that pays 7.3% APR, compounded monthly. You want to set aside exactly
enough money to make equal payments every quarter (beginning in one quarter) for the next three years.
What per period interest rate should you use in the annuity formula to do this calculation? In other words, what is r for this
calculation?
[Note that in part you are being graded on whether you know the precision with which you should give your answer. Do not
round your answer any more than you would choose to round the interest rate if you were doing the payment calculation. Note
also that you are not doing the calculation, only telling me the correct per period interest rate to be used in this calculation, so
your answer will be in percent, not dollars.]
The interest rate that you should use in the annuity formula for this calculation is%. (Round to the appropriate degree.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f7bde42-0163-4e1a-916f-7f25284c53e3%2F00a847f4-cb5a-413a-8025-9e2782d1fa3b%2Fzoqo3cl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose you plan to put money in a bank account that pays 7.3% APR, compounded monthly. You want to set aside exactly
enough money to make equal payments every quarter (beginning in one quarter) for the next three years.
What per period interest rate should you use in the annuity formula to do this calculation? In other words, what is r for this
calculation?
[Note that in part you are being graded on whether you know the precision with which you should give your answer. Do not
round your answer any more than you would choose to round the interest rate if you were doing the payment calculation. Note
also that you are not doing the calculation, only telling me the correct per period interest rate to be used in this calculation, so
your answer will be in percent, not dollars.]
The interest rate that you should use in the annuity formula for this calculation is%. (Round to the appropriate degree.)
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