6. An investment of P3,000,000.00 earns interest of 9% compounded continuously. the effective rate of interest? 7. What rate in percent compounded monthly is equivalent to 18% compounde annually? 8. When compounded bi-monthly, P150,000.00 becomes P223,183.00 after 5 year
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- (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.Define the stated (quoted) or nominal rate INOM as well as the periodic rate IPER. Will the future value be larger or smaller if we compound an initial amount more often than annually—for example, every 6 months, or semiannually—holding the stated interest rate constant? Why? What is the future value of $100 after 5 years under 12% annual compounding? Semiannual compounding? Quarterly compounding? Monthly compounding? Daily compounding? What is the effective annual rate (EAR or EFF%)? What is the EFF% for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?
- COMPOUND INTEREST 1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded quarterly, what will it become after 1 year? 2. In the previous problem, what is the effective rate? 3. What is the equivalent nominal interest rate if compounded monthly? 4. How many years are required for P1,000.00 to increase to P2,000.00 if invested at 9% per year compounded continuously? 5. What payment X ten years from now is equivalent to a payment of P1,000.00 six years from now, if interest is 15% compounded monthly? 6. An investment of P3,000,000.00 earns interest of 9% compounded continuously. What is the effective rate of interest? 7. What rate in percent compounded monthly is equivalent to 18% compounded semi- annually? 8. When compounded bi-monthly, P150,000.00 becomes P223,183.00 after 5 years. What is the nominal rate of interest?Answer the following Compound Interest problem using the provided formula ONLY. Show your complete solution. 7. Compound Interest A. If the sum of P 12,000 (pesos) is deposited in an account earning interest rate of 9% compounded quarterly, what will it become after 1 year? B. In the previous problem, what is the effective rate? C. What is then the equivalent nominal interest rate if compounded monthly?4. If 10,000php is invested in account paying 6% compounded quarterly; A. How much will be in the account at the end of 5years? b. How much interest will it earn? C. Compare the interest it will earn if it is paid at simple interest rate.
- 1. What interest comp. monthly is equivalent to an interest rate of 14.5% comp. quarterly? 2. A sum of $145,000 is invested now and left for 8 years, at which time the principal is withdrawn. The interest that has accrued is left for another 8 years. If the interest rate is 5%, what will be the withdrawal amount at the end of the 16th year? 3. How long will it take for an investment to increase by 145% its amount if money is worth 14% comp. semi-annually? 4. A man makes a payment of $1450 at the beginning of every month on a bank that offers 6% interest. How much did the man borrow if the payment would last for 10 years? 5. A young woman made a loan from a certain bank and started paying $1450 quarterly after 2 years from the loan date. If payment is to be made for 5 years and interest is 10%, how much was loaned by the woman?If the nominal interest rate is 0.03 of P95,823, how much worth in 15 years continuously compounded account?An investment becomes P 4,500,000 four years from now and becomes P 5,250,000 thirteen years from now. a. Assuming rate of compounded interest remains constant through time, what was the investment's value on the present time? b. What rate of interest compounded quarterly is equivalent to the interest rate of the given investment? c. What rate of interest compounded monthly is equivalent to the interest rate of the given investment?
- a) What would be the accumulated value of ₺ 100.000 in a saving account at 8% per year for 5 years when the interest is compounded? b) What would be the accumulated value of the same amount after 9 years with the same rate but not compounded (simple interest) annually?What is the present worth of annually payments ( 2000 $ ) if the first payment will deposit after five from now , and the last one will deposit at begin of the fifteenth year ? Assume interest rate ( 7 % ) ?What is the future value in 4 years of €1,000 invested in an account with a stated annual interest rate of 10 per cent, Required: (a) What is the future value if compounded annually? Future value € (b) What is the future value if compounded semi-annually? Future value € (c) What is the future value if compounded monthly?