Explanation Given Information: The investment with principal $ 80 , 200 invested at 4.8 % interest compounded quarterly for 9 months . Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6 % compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year Present value formula: Present value ( P V ) can be calculated as: Present value ( P V ) = A ( 1 + i ) n Here, the compound amount is A , Interest rate per period is i and the number of compounding periods n are known. Steps for solving the present value formula: Step I: Add 1 to the interest rate per period i . Step II: raise to the n th power to the resultant step 1 by use the y x key on your calculator. Step III: Divide the resultant of step 2 by the compound amount A . Calculation: Consider the principal principal $ 80 , 200 invested at 4.8 % interest compounded quarterly for 9 months and solve as below: Since, the variables-compound amount, time period (years), nominal rate and interest compounded are given; therefore, the compounding period can be calculated as below: Substitute the values in the formula for interest rate per period and simplify, Interest rate per period = Nominal rate Period per year = 4.8 4 = 1

8th Edition

ISBN: 9781305888715

Author: Brechner

Publisher: CENGAGE LEARNING - CONSIGNMENT

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Chapter 11, Problem 33AT

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To calculate: The present value and the compound interest for investment with principal $80,200 invested at 4.8% interest compounded quarterly for 9 months.

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Chapter 11, Problem 32AT

Chapter 11, Problem 34AT

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Chapter 11 Solutions

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The present value and the compound interest for investment with principal $ 80 , 200 invested at 4.8 % interest compounded quarterly for 9 months .

Solution Summary: The author calculates the present value and the compound interest for an investment with principal 80,200 invested at 4.8% interest compounded quarterly.

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To calculate: The present value and the compound interest for investment with principal $80,200 invested at 4.8% interest compounded quarterly for 9 months.

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Chapter 11 Solutions