You are watching: Which of the following bank accounts has the lowest effective annual return?
Which of the following bank account has actually the lowest effective yearly return?a. An account that pays 8% nominal interemainder w/ monthly compounding.b. An account that pays 8% nominal interemainder through annual compounding.c. An account that pays 7% nominal interemainder through daily (365-day) compounding.d. An account that pays 7% nominal interemainder through monthly compounding.
Charter Bank pays a 4.50% nominal rate on deposits, through monthly compounding. What effective yearly price (EFF%) does the financial institution pay?
If a financial institution compounds savings accounts quarterly, the nominal price will exceed the effective yearly rate. True or False
The cash flows for an annuity need to all be equal, and also they have to happen at regular intervals, such as once a year or when a month. True or False
Last year Dania Corporation"s sales were $525 million. If sales flourish at 7.5% per year, just how big (in millions) will certainly they be 8 years later?
Suppose an Exxon Corporation bond will pay $4,500 ten years from currently. If the going interest rate on safe 10-year bonds is 4.25%, how a lot is the bond worth today?
What"s the future worth of $1,200 after 5 years if the correct interest price is 6%, compounded monthly?
A two-year investment of $200 is made this day at an annual interest rate of 6%. Which of the following is true?a. the FV would certainly be better if the interemainder price was higherb. the PV would be greater if the interemainder price was higherc. the FV would certainly be greater if the interest rate was lowerd. the FV does not readjust as the interemainder price changes
A decrease while period will certainly rise the future value, other points continuing to be equal. True or False
The future value is always higher than the existing value, even if the interemainder rate is negative. True or False
The present value of a future amount decreases as either the discount price or the number of periods per your account increases, various other things held constant. True or False
All various other points held consistent, the existing value of a provided yearly annuity decreases as the variety of durations per year rises. True or False
You setup to analyze the worth of a potential investment by calculating the amount of the existing value of its meant cash flows. Which of the adhering to would increase the calculated worth of the investment?b. the discount rate decreasesc. the riskiness of the investment"s cash flows increasesd. the complete amount of cash flows stays the exact same, yet even more of the cash flows are got in the later on years and much less are recieved in the earlier years.
You desire to go to Europe 5 years from currently, and you deserve to conserve $3,100 per year, beginning one year from now. You plan to deposit the funds in a common fund that you think will certainly rerotate 8.5% per year. Under these problems, just how a lot would you have just after you make the fifth deposit, 5 years from now?
You want to quit your project and also go ago to college for a legislation degree 4 years from now, and also you arrangement to conserve $3,500 per year, start automatically. You will certainly make 4 deposits in an account that pays 5.7% interest. Under these assumptions, just how much will you have actually 4 years from today?
*** Your aunt is around to retire, and also she desires to offer some of her stock and buy an annuity that will carry out her via income of $50,000 per year for 30 years, start a year from now. The going rate on such annuities is 7.25%. How a lot would certainly it price her to buy an annuity today?
Given a positive interest price and also a positive cash flow, an annuity due constantly has actually a higher current worth than an simple annuity of the same dimension and also variety of cash flows. True or False
You are considering two equally riskies annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while investments DUE is an annuity due. Which of the complying with statements is correct?
The present value of DUE exceeds the present value of ORD, and also the future worth of DUE also exceeds the future worth of ORD.
What"s the existing value of a 4-year simple annuity of $2,250 per year plus a second $3,000 at the end of Year 4 if the interemainder price is 5%?
Suppose you are buying your first concarry out for $145,000, and also you will certainly make a $15,000 dvery own payment. You have arranged to finance the remainder via a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interemainder price, with the initially payment due in one month. What will certainly your monthly payments be?
Simpkid Construction had sales seven years back of $2,150,000. This year their sales hit $4,600,000. What has been Simpson"s average annual rate of development of sales?
You currently have actually $2,500 invested at an yearly price of 8%. How long will certainly it take for this investment to grow to a value of $3,500?
You are considering an investment in a Third World bank account that pays a nominal annual price of 18% compounded monthly. If you invest $5,000 at the start of each month, how many type of months would it take for your account to flourish to $250,000? Round fractional months up
Other points remaining equal, the price now and also the development rate are inversely associated. True or False
*** You are available a possibility to buy an asset for $7,250 that is expected to create cash flows of $750 at the finish of Year 1, $1,000 at the finish of Year 2, $850 at the finish of Year 3, and also $6,250 at the finish of Year 4. What price of rerotate would you earn if you bought this asset?
You marketed a car and also welcomed a note through the adhering to cash circulation stream as your payment. What was the efficient price you got for the auto assuming an interemainder price of 6.0%?
Suppose a financial institution supplies to lfinish you $10,000 for 1 year on a loan contract that calls for you to make interest payments of $250.00 at the finish of each quarter and also then pay off the primary amount at the end of the year. What is the reliable yearly price on the loan?
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