Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781260159516
Author: PHILLIPS
Publisher: MCG
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Chapter C, Problem 10MC
To determine
To Explain: The procedure to adjust the number of years and annual interest rate, if the interest is compounded quarterly rather than yearly.
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Students have asked these similar questions
The effective rate of interest compounded quarterly is given by i(m)/m. What is m?
Write your answer as an integer.
Assume that you must estimate what the future value will be two years from today using the future value of 1 table. (PV of $1, EV of $1.
PVA of $1, and FVA of $1)
Which interest rate column and number-of-periods row do you use when working with the following rates? (Round percentage
answers to 2 decimal places.)
Answer is complete but not entirely correct.
Number of Periods
1. 12% annual rate, compounded annually
2.8% annual rate, compounded semiannually
3. 12% annual rate, compounded quarterly
4. 12% annual rate, compounded monthly
Interest Rate
12.00
2.00
3.00
1.00
%
%
%
%
2
80
24
1.) What is the rate annually that will produce the same amount of interest per year is called?
2.) Its the total amount to be paid or received after a given period of time?
3.) What do you call the number of conversion that take place in a year
4.) What do you call the time interval between succeeding interest calculations?
Chapter C Solutions
Fundamentals Of Financial Accounting
Ch. C - Prob. 1QCh. C - Prob. 2QCh. C - Which of the following is most likely to be an...Ch. C - Prob. 4QCh. C - Prob. 5QCh. C - Prob. 6QCh. C - Prob. 7QCh. C - You are saving up for a Mercedes-Benz SLR McLaren,...Ch. C - Prob. 2MCCh. C - Prob. 3MC
Ch. C - Prob. 4MCCh. C - Prob. 5MCCh. C - Assume you bought a car using a loan that requires...Ch. C - Assume you bought a car using a loan that requires...Ch. C - Which of the following statements is true? a. When...Ch. C - Prob. 9MCCh. C - Prob. 10MCCh. C - Prob. 1MECh. C - Prob. 2MECh. C - Prob. 3MECh. C - Prob. 4MECh. C - Prob. 5MECh. C - Prob. 6MECh. C - Prob. 7MECh. C - Prob. 8MECh. C - Prob. 9MECh. C - Prob. 10MECh. C - Prob. 11MECh. C - Prob. 12MECh. C - Prob. 1ECh. C - Prob. 2ECh. C - Prob. 3ECh. C - Prob. 4ECh. C - Prob. 5ECh. C - Computing Bond Issue Proceeds and Issue Price Your...Ch. C - Computing Missing Present or Future Values...Ch. C - Prob. 1CPCh. C - Prob. 2CPCh. C - Prob. 3CPCh. C - Prob. 4CPCh. C - Prob. 1PACh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PACh. C - Prob. 4PACh. C - Prob. 1PBCh. C - Recording Equipment Purchase with Two-Year Note...Ch. C - Prob. 3PBCh. C - Prob. 4PB
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Similar questions
- If the annual interest rate is 12.9% and the dollar amount compounds daily, you would ( a. multiply b. divide) the interest rate by (a. 1 b. 12 c. 52 c. 365) and you would (a. mul tiply b. divide) the number of time periods by (a. 1 b. 12 c. 52 d. 365)arrow_forwardHow do I find the annual percentage rate with the effective interest rate?arrow_forwardFor each of the following cases, indicate (a) to what rate columns, and (b) to what number of periods you would refer in looking up the interest factor. 1. In a future value of 1 table: a. b. C. a. b. Annual Rate C. 11% 12% 12% Annual Rate 10% 11% 12% Number of Years Invested Number of Years Invested 25 14 6 11 7 2. In a present value of an annuity of 1 table: (Round "Rate of Interest" answers to 1 decimal place, e.g. 4.5% and other answers to O decimal places, e.g 45.) 19 Number of Rents Involved 25 28 Compounded 24 Annually Quarterly Semiannually Frequency of Rents Annually Semiannually (a) Rate of Interest Quarterly % (a) Rate of Interest % % % % de (b) Number of Periods % (b) Number of Periodsarrow_forward
- 3. Future value The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is called four time-value-of-money variables. Which of the following is not one of these variables? O The present value (PV) of the amount invested O The duration of the investment (N) O The interest rate (I) that could be earned by invested funds O The inflation rate indicating the change in average prices This process requires knowledge of the values of three ofarrow_forwardCompute the number of years (t) if future value (FV) = $5575, present value (FV) = $1812, and interest rate (r) = 9.1%,arrow_forwardFor each of the following cases, indicate (a) what interest rate columns and (b) what number of periods you would refer to in looking up the present value factor. (1) In Table 3 (present value of 1): Number of Discounts Annual Rate Years Involved per Year Case A 9% 7 Case B 10% 8 Annually Semiannually Case C 8% 8 Semiannually Case A Case B Case C (a) (b) % periods % periods % periods (2) In Table 4 (present value of an annuity of 1): Annual Rate Number of Years Involved Number of Payments Involved Frequency of Payments Case A 8% 15 15 Annually Case B 8% 4 4 Annually Case C 12% 8 16 Semiannually (a) Case A % Case B % (b) periods periods Case C % periodsarrow_forward
- All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%, 8%, or 16%. Identify the interest rate that corresponds with each line. VALUE (Dollars) Line A: 01 2 3 4 5 Line B: 6 B Line C: C 7 8 9 10 TIME (Years) Investments and loans base their interest calculations on one of two possible methods: the interest and the interest methods. Both methods apply three variables-the amount of principal, the interest rate, and the investment or deposit period to the amount deposited or invested in order to compute the amount of interest. However, the two methods differ in their relationship between the variables.arrow_forwardneed answerrarrow_forwardFor the following exercise, use the compound interest formula, A(t) = P 1 + r n nt , where money is measured in dollars.After a certain number of years, the value of an investment account is represented by the expression 10,950 1 + 0.03 2 24 . How many years had the account been accumulating interest? yrarrow_forward
- A certain some of money P draws interest compounded continuously. If a certain time there are Po dollars in the account, determine the time when the financial attains the value of 2Po dollars if the annual interest rate at 2%arrow_forwardWhich of the following is the correct mathematical expression of effective annual rate (EAR)? (m denotes the number of times the interest is compounded during the year.) Multiple choice question. EAR = [1 − (Quoted rate/m)]m + 1 EAR = [1 + (Quoted rate/m)]m − 1 EAR = [1 + (Quoted rate/m)]m + 1 EAR = [1 − (Quoted rate/m)]m − 1arrow_forwardCompute the interest rate if future value (FV) = $7,198, present value (FV) = $2,694, and number of years (t) = 9. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.):arrow_forward
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