Your bank account pays a 6% nominal rate of interest. The attention is compounded quarterly. What is the routine rate that interest and the effective rate that interest?


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Which of the following bank account has actually the shortest effective yearly return?a. An account that pays 8% nominal interest w/ monthly compounding.b. One account that pays 8% nominal interest with yearly compounding.c. An account that pays 7% nominal attention with everyday (365-day) compounding.d. An account the pays 7% in the name interest through monthly compounding.
Charter bank pays a 4.50% nominal rate on deposits, through monthly compounding. What effective yearly rate (EFF%) does the financial institution pay?
If a bank compounds savings accounts quarterly, the nominal price will exceed the effective annual rate. True or False
The cash flows because that an annuity have to all be equal, and also they must happen at constant intervals, such as once a year or as soon as a month. True or False
Last year Dania Corporation"s sales were $525 million. If sales flourish at 7.5% per year, how big (in millions) will certainly they be 8 years later?
Suppose one Exxon corporation bond will pay $4,500 ten years from now. If the going interest price on for sure 10-year binding is 4.25%, how much is the bond worth today?
What"s the future worth of $1,200 after ~ 5 year if the appropriate interest price is 6%, compounded monthly?
A two-year investment of $200 is made today at an annual interest price of 6%. I beg your pardon of the following is true?a. The FV would certainly be better if the interest rate was higherb. The PV would be greater if the interest rate was higherc. The FV would certainly be higher if the interest price was lowerd. The FV go not change as the interest price changes
A diminish in the time duration will boost the future value, various other things staying equal. True or False
The future worth is always greater than the present value, also if the interest price is negative. True or False
The present value that a future amount decreases as either the discount price or the variety of periods per your account increases, other things held constant. True or False
All other things hosted constant, the existing value of a given annual annuity decreases as the variety of periods per year increases. True or False
You arrangement to analysis the worth of a potential investment by calculating the sum of the current value of its supposed cash flows. I beg your pardon of the complying with would increase the calculated worth of the investment?b. The discount rate decreasesc. The riskiness that the investment"s cash flows increasesd. The complete amount of cash flows continues to be the same, but an ext of the cash flows are obtained in the later on years and less are recieved in the earlier years.
You want to walk to Europe 5 year from now, and also you deserve to save $3,100 per year, beginning one year native today. You plan to deposit the accumulation in a mutual money that you think will certainly return 8.5% every year. Under this conditions, just how much would certainly you have actually just after you do the fifth deposit, 5 year from now?
You want to quit her job and go earlier to school for a law degree 4 year from now, and also you arrangement to save $3,500 every year, start immediately. You will make 4 deposits in one account the pays 5.7% interest. Under these assumptions, exactly how much will you have 4 year from today?
*** her aunt is around to retire, and she wants to sell some of her stock and also buy one annuity the will provide her with earnings of $50,000 per year for 30 years, beginning a year indigenous today. The going rate on such annuities is 7.25%. Exactly how much would it expense her come buy an annuity today?
Given a optimistic interest rate and also a positive cash flow, an annuity due always has a greater present value 보다 an plain annuity the the exact same size and number of cash flows. True or False
You room considering two equally risky annuities, every of which pays $5,000 every year for 10 years. Investment ORD is an simple (or deferred) annuity, while investments DUE is an annuity due. I m sorry of the adhering to statements is correct?
The existing value of due exceeds the current value of ORD, and also the future worth of DUE likewise exceeds the future value of ORD.
What"s the present value the a 4-year simple annuity the $2,250 every year plus secondary $3,000 in ~ the finish of Year 4 if the interest price is 5%?
Suppose you room buying your very first condo because that $145,000, and also you will certainly make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, through the very first payment due in one month. What will your monthly payments be?
Simpson building and construction had sales 7 years ago of $2,150,000. This year their sales struggle $4,600,000. What has been Simpson"s average yearly rate of expansion of sales?
You right now have $2,500 invested at an yearly rate that 8%. How long will it take because that this investment to thrive to a worth of $3,500?
You are considering an invest in a third World bank account the pays a nominal annual rate the 18% compounded monthly. If girlfriend invest $5,000 at the beginning of every month, how numerous months would certainly it take for her account to thrive to $250,000? round fractional months up
Other things continuing to be equal, the price today and also the growth rate space inversely related. True or False
*** friend are offered a chance to buy an asset because that $7,250 that is meant to produce cash operation of $750 at the end of Year 1, $1,000 in ~ the finish of Year 2, $850 at the finish of Year 3, and $6,250 in ~ the end of Year 4. What rate of return would you earn if you bought this asset?
You offered a car and accepted a keep in mind with the complying with cash circulation stream together your payment. What was the reliable price you received for the car assuming an interest rate of 6.0%?
Suppose a bank offers to lend you $10,000 for 1 year top top a loan contract the calls because that you to make interest payments of $250.00 at the finish of every quarter and then pay turn off the major amount in ~ the finish of the year. What is the effective annual rate top top the loan?
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