Determine the nominal interest rate compounded continuously corresponding to an effective interest rate of 12% per year. Select one: a. 11.33% b. 11.75% c. 10.68% d. 10.25%
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Determine the nominal interest rate compounded continuously corresponding to an effective interest rate of 12% per year.
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- 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?Using Table 11-1, compute the amount of compound interest (in $) earned in 1 year and the annual percentage yield (APY) for the investment. (Round your answers to two decimal places.) Principal NominalRate (%) InterestCompounded Compound InterestEarned in 1 Year Annual PercentageYield (APY) $6,000 12 semiannually $ %Find the effective interest rate (effective annual yield) of an investment that pays 10% per year (quoted or nominal rate) with the interest reinvested quarterly. a. .116 b. .199 c. .104 8 d. 188 The effective interest rate (effective annual vield) is the actual percentage interest paid by the bank
- Find the nominal interest rate for each of the following investments. Principal Nominal Interest Rate % Compounding Frequency Term Maturity Value $10,525 annually 7 years $16,525 $11,000 semi-annually 12 years $17,500 $26,650 quarterly 4 years and 9 months $36,650 $24,000 monthly 5 years and 8 months $30,500An investment earns an annual interest rate of 12 percent compounded quarterly. What is the effective annual rate?A. 3.00%.B. 12.00%. C. 12.55% Use excelIf the accumulated value of an investment that is growing at 3.95% compounded semi-annually is $93,924.39, and the interest earned on this investment is $47,924.39, calculate the time period of this investment. Calculate the effective interest rate for each of the following nominal interest rates: a. 2.73% compounded quarterly. b. 2.73% compounded monthly.
- Assume an effective compound interest rate 6% per annum. a) The nominal interest rate payable semi-annually b) The effective interest rate payable quarterly c) The effective rate of discount per annum d) The nominal rate of discount payable monthlyWhich one of the following represents the highest effective interest rate per year? Select one: O a. 10.5% per year, compounded semiannually Ob. 10.4% per year, compounded daily O c. 10% per year, compounded quarterly O d. 10% per year, compounded monthly O e. 9.8% per year, compounded continuouslySuppose that an investment promises to pay a nominal 9.6 percent annual rate of interest. What is the effective annual interest rate on this investment assuming that interest is compounded (a) annually? (b) semiannually? (c) quarterly? (d) monthly? (e) daily (365 days)? (f ) continuously? (Note: Report your answers accurate to four decimal places –e.g., 0.0987 or 9.87%.)
- A one-time investment is made in the amount of $9,200 for 15 years at an APR of 6%. Compound Interest: , where is the final amount, is the principal invested, is the interest rate per compounding period, and is the number of compounding periods. Compounded Principal Interest Rate per Compounding Period Number of Compounding Periods Write the Compound Interest Formula Final Amount Annually $9,200 6% 15 ? = 9,200(1 + 0.06)^15 $22,048.34 Semi-Annually $9,200 Quarterly $9,200 Monthly $9,200 Weekly $9,200 Daily $9,200Find the total number of compounding periods and the interest rate per period for the investment. Term ofInvestment Nominal(Annual) Rate (%) InterestCompounded CompoundingPeriods Rate perPeriod (%) 7 years 4 quarterly %(a) What is the simple interest on ₱ 30,000 for six months at a simple interest rate of 12% (b) What is the compound interest if the same investment is compounded quarterly? (c) Obtain the difference. Note: please find also the compound amount and compound interest
