Question
Asked Nov 22, 2019
1 views
  1. Find the effective interest rate for a $1,500 loan for four years compounded semiannually at an annual rate of 8%.
check_circle

Expert Answer

Step 1

Calculation of Effective Interest Rate:

The effective interest rate is 8.16%.

Excel Spreadsheet:

...
A
В
1 Interest Rate
8%
2
Number of Compounding Periods
2
Effective Interest Rate
3
8.16%
help_outline

Image Transcriptionclose

A В 1 Interest Rate 8% 2 Number of Compounding Periods 2 Effective Interest Rate 3 8.16%

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Finance

Interest Rate Model

Related Finance Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levere...

A: a.Number of Outstanding Shares (Under Plan I) = 150,000 Number of Outstanding Shares (Under Plan II)...

question_answer

Q: Jake just got a ​$96000 mortgage in order to buy a new​ home, and he was able to get a 30 year loan ...

A: Loan Amount (pv) = $96,000Interest Rate (rate) = 5.5%Time Period = 30 YearsNumber of Payments in a Y...

question_answer

Q: An investor purchases 1,000 shares of XYZ Corp. @ $20.  A year later, she sells the shares for $26. ...

A: When an investor purchases a stock, the rate of return comes in two forms, they are dividend  and ca...

question_answer

Q: What is the MIRR for the project using a 12% Cost of Capital? Show in a timeline format. Year Cas...

A: Modified Internal Rate of Return (MIRR) is a new form of Internal rate of return (IRR). It also help...

question_answer

Q: Maxwell Industries has just issued a callable (at 102) ten-year, 8% coupon bond with semiannual coup...

A: Calculation of Yield to Call (YTC):Answer:Yield to call is 11%.Note: Coupon payments are usually mad...

question_answer

Q: How many hours per week does the average American spend on financial planning and investing

A: NOTE: The answer might vary from person to person due to individual views and opinions.

question_answer

Q: As fixed operating costs increase and all other factors are held constant, ________.   the degre...

A: The Degree of Operating Leverage (DOL) is a multiple that makes measurement on the amount of operati...

question_answer

Q: Ba short position in a fulures coedracd Csold a forward coetract D. purchased a forwand contracd E. ...

A: Option is a derivative instrument which gives the buyer the right to buy or sell an asset at a prede...

question_answer

Q: stainht 14. A Japanese investor can earn a I percent annual interest rate in Japan or about 3.5 perc...

A: According to the interest rate parity formula, forward rate can be calculated if the interest rate o...