Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 9P
a)
Summary Introduction
To determine: The EAR to calculate APR and the APR that the person X receives semi-annually.
Introduction:
An annual percentage rate is the amount of simple interest earned in a year without compounding effect. This includes the additional fees with the transaction, excluding the compounding.
b)
Summary Introduction
To determine:
The APR that the person X receives monthly.
Introduction:
An annual percentage rate is the amount of simple interest earned in a year without compounding effect. This includes the additional fees with the transaction, excluding the compounding.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose you invest $100 in a bank account, and five years later it has grown to $134.39.
What APR did you receive if the interest was compounded semiannually?
What APR did you receive if the interest was compounded monthly
Suppose you invest $103 nin a bank account, and five years later it has grown to $137.91.
a. What APR did you receive, if the interest was compounded semiannually?
b. What APR did you receive if the interest was compounded monthly?
Suppose you deposit $1,098.00 into an account 5.00 years from today. Exactly 14.00 years from today the account is worth $1,577.00. What was the account's interest rate?
Chapter 5 Solutions
Corporate Finance
Ch. 5.1 - Prob. 1CCCh. 5.1 - Prob. 2CCCh. 5.2 - How can you compute the outstanding balance on a...Ch. 5.2 - What is an amortizing loan?Ch. 5.3 - What is the difference between a nominal and real...Ch. 5.3 - How do investors expectations of future short-term...Ch. 5.4 - Prob. 1CCCh. 5.4 - How do taxes affect the interest earned on an...Ch. 5.5 - What is the opportunity cost of capital?Ch. 5.5 - Why do different interest rates exist, even in a...
Ch. 5 - Your bank is offering you an account that will pay...Ch. 5 - Which do you prefer: a bank account that pays 5%...Ch. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - You are considering moving your money to a new...Ch. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - You can earn 50 in interest on a 1000 deposit for...Ch. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - You have just sold your house for 1,000,000 in...Ch. 5 - Prob. 16PCh. 5 - Your mortgage has 25 years left, and has an APR of...Ch. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - The mortgage on your house is five years old. It...Ch. 5 - You have credit card debt of 25,000 that has an...Ch. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Suppose the term structure of risk-free interest...Ch. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Suppose the current one-year interest rate is 6%....Ch. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Your best friend consults you for investment...Ch. 5 - Suppose you have outstanding debt with an 8%...Ch. 5 - In the summer of 2008, at Heathrow Airport in...Ch. 5 - Your firm is considering the purchase of a new...Ch. 5 - Prob. 41P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Suppose you invest $1,200 in an account paying 4% interest per year. a. What is the balance in the account after 2 years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 25 years? How much of this balance corresponds to "interest on interest"?arrow_forwardIf you deposited P1,000 a couple of years ago in a bank that pays the interest bimonthly. After that, the money in the account had grown to P1,800. Determine the nominal interest rate and the effective interest rate.arrow_forwardA person deposited an amount of 1000 dinars in a savings account, what is the accumulated amount in that account after 6 years if the interest rate is 16%, paid once every six months, and four times annually???arrow_forward
- Suppose you invest $1,250 in an account paying 8% interest per year. a. What is the balance in the account after 3years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 31 years? How much of this balance corresponds to "interest on interest"?arrow_forwardSuppose you invest $850 in an account paying 5% interest per year. a. What is the balance in the account after 2 years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 29 years? How much of this balance corresponds to "interest on interest"? a. What is the balance in the account after 2 years? The balance in the account after 2 years is $ (Round to the nearest cent.)arrow_forwarda man borrows money from a bank . he receives the money in 5 equal annual installment of X commencing at t=1 with t in years.He repays the loan with twenty equal annual payment of 100 . if the first payment is due one year after the last installment and the interest rate is i=0.13 the find an equation for Xarrow_forward
- Suppose you receive $190 at the end of each year for the next three years. a. If the interest rate is 7%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 7% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)?arrow_forwardSuppose you have $1500 in your savings account at the end of a certain period of time. You invested $1100 at a 5.37% simple annual interest rate. How long, in years, was your money invested?arrow_forwardSuppose you invest $1,100 in an account paying 5% interest per year. What is the balance in the account after 4 years? How much of this balance corresponds to "interest on interest"? What is the balance in the account after 30 years? How much of this balance corresponds to "interest on interest"? (Round to the nearest cent.)arrow_forward
- 8. On April 1, you opened a savings account at Main Street Savings Bank with a deposit of $817.25. At the end of October the interest was computed at an annual rate of 6% and added to the balance in your account.. a. How much simple interest did your money earn? b. What was your new balance?arrow_forwardThe principal represents an amount of money deposited in a savings account subject to compound interest at the given rate. A. Find how much money there will be in the account after the given number of years. B. Find the interest earned. Click the icon to view some finance formulas. A. The amount of money in the account after 2 years is $. (Round to the nearest hundredth as needed.) B. The amount of interest earned is $. (Round to the nearest hundredth as needed.) Principal $2000 Rate 5% 7 Compounded annually Time 2 yearsarrow_forwardSuppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value of these cash flows? The present value of these cash flows is $ |. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $ (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)?…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
5 Steps to Setting Achievable Financial Goals | Brian Tracy; Author: Brian Tracy;https://www.youtube.com/watch?v=aXDuLxEJqBo;License: Standard Youtube License