Answered: If $956.00 accumulates to $1250.87 in…

If $956.00 accumulates to $1250.87 in three years, three months compounded monthly, what is the effective annual rate of interest?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 22PROB

See similar textbooks

Related questions

Q: If $800 is invested for one year at 6% compounded quarterly, the amount of interest earned is…

A: Principal, P = $ 800Interest rate is 6% compounded quarterlyHence, r = 6%, m = frequency of…

Q: At what nominal rate, compounded quarterly, would $15,000.00 have to be invested to amount to…

A: FV = PV * (1 + i/n)^(n * Years) Where FV = Future Value = $18276.04 PV = Present Value = $15000 i =…

Q: If the single payment present worth factor for 10 years is 0.30656. Determine the interest rate…

A: The present factor is the present value of $1 that has to be received/paid in the future.

Q: w much will be in an account at the end of five years the amount deposited today is $10,000 and…

A: The given problem can be solved using FV function in excel. FV function computes future value for…

Q: You place $4000 into an account paying 8% compounded annually. Inflation is 2.5% during each of the…

A: The real rate of return is the actual rate of return after taking inflation into account. The…

Q: A $183900 Ioan is repaid by 23 payments of $2500 each at the end of quarter, followed by 29 payments…

A: Loan is contract between lender & borrower where lender provide funds to borrower for definite…

Q: What is the amount of P12,800 in 4 years at 5% compounded quarterly? Answer:

A: Compound interest is calculated by below formula A=P(1+r/n)^nt Where A= Final Amount P= Initial…

Q: If $900 is invested at 10% compounded quarterly, what is the interest earned after a) 4 years…

A: Time has been precious in all perspectives, however in terms of finance, time has a monetary value.…

Q: How long will it take for P 1,000.00 to amount to P 1,346.00 if invested at 6 compounded quarterly?

A: Interest is the amount charged or received by investing or borrowing some amount. It can be simple…

Q: $39,000 is deposited for 2 years in an account earning 6% interest. (Round your answers to two…

A: The present value (PV) is $39,000. The number of compounding periods (n) is 8 (2 * 4). The quarterly…

Q: At what rate compounded monthly will P4,222 accumulate to P16,444 in 2 years and 10 months?

A: Yield to maturity can be calculated by following function in excel =RATE (nper, pmt, pv, [fv],…

Q: onths on an inve

A: Given , Earned= 265, Investment= 20,000.

Q: Find the total amount of interest to the nearest cent if the interest s comounded annually. $2750 at…

A: Principal amount (P) = $ 2750 Interest rate (r) = 8% Period (n) = 2 Years

Q: Find the amount at the end of 2 years and 6 months if P2,000 is invested at 71% compounded…

A: Invested amount (X) = P 2000 n = 2 years 6 months = 10 quarters r = 71% per annum = 17.75% per…

Q: An investment of $2600 earns interest at 7.2 % per annum compounded quarterly for four years. At…

A: Compound interest is a method of calculating interest on the principal amount by considering the…

Q: 1. If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded…

A: This pertains to compound interest. Compound interest accrues on both the initial principal as well…

Q: at what interest rate will a principal of P9,500 accumulate to P15,000 in 2 years compounded…

A: Future value = Present value*(1+interest rate/k)^(n*k) where n = number of years = 2 k = compounding…

Q: If $6000 is invested in an account. After three years, the account has $7500 in it. If money is…

A: Question is based on the concept of Time value

Q: If $200 is invested at 5% compounded quarterly, what is the interest earned after: a) 6 years,…

A: The formula used as follows: A=P1+rnn×t

Q: Same as $35,245 to be accumulated in 6 years; quarterly payments of $1300 ..... The interest rate…

A: Given information : Amount to be accumulated $35,245 Time period (years) 6 Quarterly…

Q: or total yearly payments of $10000 for 10 years, compare the compound amount accumulated at the end…

A: Given information: Annual payments : $10,000 Time periods : 10 years Nominal Rate of interest : 20%

Q: An investment of $1831.00 earned interest semi-annually. If the balance after 5.5 years was…

A: Using excel RATE function

Q: What is the interest earned on the principle of RM18,000 at the rate of 12% for 1 year and 4 months…

A: Principal amount (P) = RM 18,000 Interest rate = 12% Monthly interest rate (r) = 12%/12 = 1% Period…

Q: 40,000 is repaid over 9 years with payments occurrir = the size of the periodic payment? = the…

A: interest rate is compounding quarterly so we have to find effective annual interest rate.

Q: The amount received at 10% per annum compounded quarterly after 2 years is RM3,150. Then, find the…

A: The amount received after 2 given. The principal amount will be present value of amount received…

Q: What is the effective rate of interest

A: In this case first the quarterly interest rate would be calculated and from quarterly interest rate,…

Q: What is the present value of P2,500 semiannual payments received at the beginning of each period for…

A: Please refer to the image below

Q: If $400 is invested at 10% compounded quarterly, what is the interest earned after: a) 6 years…

A: Compound Interest: It refers to the additional interest added to the principal amount of any deposit…

Q: What is the nominal rate of interest if Php12,000 accumulates Php30,000 in 10 years with interest…

A: Solution: Present value (PV) 12,000.00 Future value (FV) 30,000.00 Period (Nper) 40…

Q: Compute the nominal rate of intrrest at which $980 deposited at the end of eaach month quaretly for…

A: Nominal interest rate is the rate of return without considering the inflation rate or before…

Q: A certain amount is invested 5 years and 6 months ago at an interest rate of 8% compounded semi -…

A: Amount invested can be calculated as: = Future value / (1 + rate per period) ^ number of periods

Q: What is the (a) present value and (b) compound interest earned for 3 years and 9 months of P84,500…

A: Given, The future amount is P84,500 Rate is 20% Term is 3 years and 9 months

Q: Find the compound interest accumulated on BD 14500 at the end 9 years if it is invested at 4%…

A: Compound interest is the interest earned on the principal as well as on the interest earned…

Q: What is the effective rate of interest if Php12,000 accumulates Php30,000 in 10 years with interest…

A: Solution: Present value (PV) 12,000.00 Future value (FV) 30,000.00 Period (Nper)…

Q: If P5,000.00 shall accumulate for 10 years at 8% compounded quarterly, find the compounded interest…

A: We need to use compound interest formula given below A=P(1+i)n where A= Final payment P=principal…

Q: Compare the interest earned by P dollars at i% per year simple interest with that earned by the same…

A: Time value of money- It is based on the concept that money earned today is worth more than similar…

Q: (a) If $5,500 is invested at 1.35% interest, find the value (in dollars) of the investment at the…

A: Future Value: It refers to the future worth of the current amount and is computed by the product of…

Q: $2500.00 is invested in an account with a 3.1% interest rate that is compounded quarterly. How much…

A: The money at the end of one year can be computed using the Future Value Formula.

Q: What is the equal payment series for 12 yearsthat is equivalent to a payment series of $25,000 atthe…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: A payment of $2,690 was due two years ago, and a payment of $1,650 is due today. What single payment…

A: This question can be solved in light of time value of money and future value. The formula to…

Q: $100 is deposited each quarter for 5 years. What is the future value of the account if interest rate…

A: FORMULA FVA = P*[(1+R)N-1]/R Where FVA - Future value of annuity P - Quarterly deposit amount i.e.…

Q: If the sum of P12,000.00 is deposited in an account earning interest rate of 9% compounded…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: Compute the nominal annual rate of interest compounded quarterly at which $300.00 paid at the end of…

A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…

Q: Solve for the compound amount and compound interest at the end of 1 year if S7,000 is invested at 4%…

A: An interest rate method in which current interest is computed by multiplying the interest rate by…

Q: Determine P & F for the diagram below: Immi For the first seven years, interest is 12% per year…

A: Here, Annual deposits for the first 7 years = 500 Interest rate = 12% compounded monthly Annual…

Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

If $956.00 accumulates to $1250.87 in three years, three months compounded monthly, what is the effective annual rate of interest?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,600
The sum of P15, 000.00, deposited in an account earning 4% per annum compounded quarterly, will become P18, 302.85. Determine the effective rate of interest per year.
What is the (a) present value and (b) compound interest earned for 3 years and 9 months of P84,500 that is compounded quarterly at 20% interest?
. If the sum of P12,035 is deposited in an account earning interest at the rate of 9% compounded quarterly, what will it become at the end of 8 years?
If $900 is invested at 10% compounded quarterly, what is the interest earned after a) 4 years Interest earned = $ b) 3 yearsInterest earned = $
1000 dollars is deposited into an account at the beginning of the year and the value at the end of five years is 1276.30. (a) If the account was subject to a force of interest δ(t) = kt where t is in years, k =? (b) If inflation is 1 percent a year, what is the adjusted effective yearly interest rate?
Compute the nominal rate of intrrest at which $980 deposited at the end of eaach month quaretly for 11 years and 9 months will amount to $34000.00
Find the amount at the end of 5 years and 4 months if P8,000 is invested at 93% compounded quarterly, using simple interest for anytime less than a year interest period.
How long will it take for P 1,000.00 to amount to P 1,346.00 if invested at 6 compounded quarterly?
A$35,000loan bearing interest at5%compounded quarterly was repaid, after a period of deferral, by quarterly payments of$1573.83over 12 years. What was the time interval between the date of the loan and the first payment?
Suppose $15,000 is invested in an account with an APR of 4.5%. If the interest is compounded annually, how much interest is earned over the first 6 years? If the interest is compounded monthly, how much interest is earned over the first 6 years?
What is the present worth of P500 deposited at the end of three months for 6 years interest rate is 12% compounded semi-annually?